Explainer: Row over IDBI Bank sale to Canadian firm founded by Modi cheerleader

The IDBI Bank deal is a ‘masterclass in the BJP’s tendency to privatise gains while socialising costs’, Congress MP Pawan Khera tweeted on Friday, 30 October, raising six questions to finance minister Nirmala Sitharaman:

• Why is the agreed sale price below the bank’s quoted share price? Who sells at a discount to the market, and why?”

• The bank had made “thousands of crores in profit” over five years, while its assets, including fixed assets in 29 states and 50 acres in Hyderabad, were said to be worth around Rs 25,000 crore. It doesn’t seem all this has been priced in. Why?

• Was the bidding process altered and did the goalposts move? If yes, what changed, and who asked for it?

• What was the government’s need to sell a majority stake of 60.72 per cent amid opposition from bank employees and parliamentary assurance of 2003 that the government’s stake in the bank would never fall below 50 per cent?

• Why the lack of disclosure about the second bidder allegedly rejected on grounds of national security. Why is its identity being hidden and if it posed a security risk, why was it allowed to bid?

• What is the role of Amitabh Kant in the IDBI Bank disinvestment deal?

Sitharaman also took to social media to deny any wrongdoing. She recalled the ‘Mundhra scandal’ of 1957 and the replacement of the SBI chairman in 1976 besides the alleged ‘lies’ related to the Rafale fighter jet deal by Rahul Gandhi to accuse Congress governments of banking irregularities. The relevance of any of it in 2026 was lost on most people.

Managing Editor of Moneylife, author and activist Sucheta called upon the finance minister to clarify on the allegation of fresh valuation after opening bids. “Were this to happen in a private company instead of the finance ministry, heads would have rolled by now or a detailed explanation offered,” she posted.

The CPI(M) MP John Brittas pointed out another absurdity in the IDBI deal. “To justify accepting less than the original minimum price, the Government reportedly invoked an unusual precedent: the Railway Stores Code for auctioning scrap which states "Bids lower than the reserve prices may, however, be accepted by the Depot Officer where found expedient provided the Depot Officer doing so records his reasons in writing" - to help justify the sale of a strategic public bank!! Since when is a national banking asset to be treated like railway scrap? Who changed the rules, why, and in whose interest - and at what cost to the public,” he asked.

So, what is the fuss all about? On 14 October 2026 shares of IDBI Bank were being traded at Rs 93.60 per share. The closing price was Rs 90.32. The same day, however, the union cabinet approved the sale of a combined 60.72 per cent stake of LIC and GOI in the IDBI at a much lower Rs 81 per share, valuing the transaction at Rs 52,878 crore or so to Fairfax Financial Holdings, a Canadian company.

The chairman and CEO of Fairfax Prem Watsa has been a Narendra Modi cheerleader and has publicly stated that India is blessed to have him as the prime minister. He has publicly praised the government’s economic policies and schemes like Make in India and ease of doing business. Watsa, described in some quarters as Canada’s Warren Buffet, founded Fairfax in 1987 and has expanded and diversified the company’s global operations. In India Fairfax has stakes in firms such as the Bengaluru Airport, CSB Bank, Go Digit, Thomas Cook India, and now IDBI Bank.

The controversy is centred around whether a profitable public sector company be handed over to a foreign, private entity. Has Fairfax been unduly favoured by changing the rules and fixing a reserved price much lower than what was fixed? Reports that former IAS officer and a Modi confidante Amitabh Kant, who was designated as the G20 Sherpa, has joined Fairfax as a senior advisor have strengthened the suspicion that the sale has been politically motivated.

Why sell a profitable PSU bank?  IDBI Bank’s financials improved dramatically and consistently over the last five years. Compared with many mid-sized PSU banks such as Central Bank of India, Indian Overseas Bank, UCO Bank, Bank of Maharashtra etc. IDBI’s asset quality, profitability growth and capital adequacy have been the strongest. Profit After Tax in the last three years have grown steadily from Rs 5,788 crore to Rs 7,631 crore to Rs 9,513 crore in the year 2025-26. In the last five years since 2022, IDBI Bank has posted a cumulative profit after tax of Rs 28,000 crore and more. In September 2026 IDBI Bank showed deposits of Rs 3.56 lakh crore and Advances of Rs 2.72 lakh crore. Gross Non-performing Assets also declined to 2.12 per cent.

The Businessworld investigation: An investigation by Palak Shah published in Businessworld revealed that the bid of Fairfax was opened on 13 July 2026; finding that the bid was substantially lower than the reserved price, officials proceeded to junk the rules and adopted a different methodology to arrive at a reserved price lower than the bid of Fairfax. The Government had itself fixed the reserve price at Rs 94.42 per share. But after finding out that Fairfax had offered only Rs 81 per share, officials proceeded to revise the reserved price downwards and settled at Rs 75.99 per share, below Fairfax’s offer of Rs 81.

Reserve prices, the minimum baseline, are generally fixed before the bids are opened. In this case the Government opned the bid and then proceeded to change the valuation framework. The government’s own disinvestment guidelines, the magazine reported, stated that officials fixing reserve prices should not know the bidders’ prices beforehand. Indeed, the market expected Fairfax to pay as much as Rs 110 per share, which is one of the reasons why IDBI shares were being traded at Rs 93 on 14 October.  

Was the sale process fair, transparent and designed to maximise value? Doubts that a valuable public asset is being sold cheaply and the valuation process may have been adjusted to fit the bid by Fairfax are yet to be allayed. Former finance secretary Subhash Garg questions the propriety of reducing the benchmark after bidders failed to meet the original reserve price. He also pointed to the limited bidding interest with only two bids having been received. This may not have generated sufficient competitive bids to discover the best price, he suggested. Garg recommends that the transaction should be cancelled and re-opened through a fresh bidding or others allowed to better the offer of Fairfax.

In 2019 when IDBI was weak and needed to be rescued, nobody wanted it. Public money from the Government and the LIC bailed it out. Now that IDBI has become healthy, the government has sold it to a private, foreign entity. Since public money was used to nurse it back to health, the profits it now makes should also be used for public good and not private profit, is the argument of critics.