IDBI Bank staff call nationwide strike to block $5.5 billion Fairfax acquisition

The United Forum of IDBI Officers and Employees announced a two-day nationwide strike on Sunday to oppose the proposed sale of IDBI Bank. The labor group is targeting the acquisition by Canadian insurer Fairfax Financial Holdings, a deal valued at $5.5 billion.

The union issued a post on X stating that the workforce has grave concerns regarding the transparency of the sale and the valuation process. The group is demanding that the Indian government cancel the privatization process entirely. Instead, they want the state to focus on strengthening the bank while protecting public investment and employee interests.

Political opposition has joined the industrial action. On Thursday, Rahul Gandhi, the leader of the opposition, pledged support to the employee unions. He argued that public banks are tools to build the nation rather than assets for sale. Gandhi noted that transferring a stake of over 60 percent to Fairfax contradicts previous government commitments to retain a 51 percent holding in the state-owned lender.

Finance Minister Nirmala Sitharaman defended the transaction, stating that the bank was handed to the government in poor shape. She credited professional management and prudence with reviving the institution, which received more than 250 billion rupees in recapitalization. That amount equates to $2.6 billion. Sitharaman described IDBI Bank as poised for its next phase of growth, a stage the government says will be driven by a strategic investor.

The government declared on Oct. 14 that this sale would mark the largest foreign direct investment transaction in India's financial sector. Fairfax bid 81 rupees per share for the bank, exceeding the average fair value of 75.99 rupees. On Monday, IDBI shares opened at approximately 79 rupees.

Doubts about the pricing emerged in Indian media. Businessworld reported on Thursday that government officials suppressed the bank's valuation to make Fairfax's offer appear more attractive. The Ministry of Finance responded by defending its procedure as double blind. This method ensures the bidder does not know the valuation and the valuators do not see the bids.

The divestiture fits a wider pattern of the Indian government selling stakes to manage fiscal pressure. The state has already sold shares in Cochin Shipyard, Indian Railways Finance Corp, NHPC, and Coal India. In August, the government raised $3.3 billion by selling a 6.5 percent stake in Life Insurance Corporation of India.