Canadian investment company Fairfax Financial Holdings’ proposed $5.5 billion acquisition of a controlling stake in India’s state-owned IDBI Bank is facing growing resistance from employees and political leaders, raising concerns about privatization, transparency and the future of public-sector banking.
The United Forum of IDBI Officers and Employees announced Sunday that it would organize a two-day nationwide strike to protest the proposed sale of more than 60 per cent of the bank to Fairfax.
The employee union has questioned the transparency of the bidding and valuation process, calling on the Indian government to cancel the privatization plan and instead focus on strengthening the bank while safeguarding public investments and workers’ interests.
Fairfax emerged as the successful bidder in October, offering 81 rupees per share, above the average assessed fair value of 75.99 rupees.
If approved, the transaction would become the largest foreign direct investment deal in India’s financial sector, according to the Indian government.
The proposed takeover has also triggered political criticism, with opposition leader Rahul Gandhi expressing support for the bank’s employees and their campaign against privatization.
In a statement Thursday, Gandhi argued that public-sector banks play a crucial role in national development and should not be treated merely as assets available for sale.
He also questioned the government’s decision to sell a majority stake, pointing to earlier commitments to maintain at least 51 per cent public ownership in IDBI Bank.
Indian Finance Minister Nirmala Sitharaman defended the government’s position, saying the bank had previously faced significant financial difficulties and required substantial intervention to restore its stability.
She noted that IDBI Bank had undergone restructuring and received more than 250 billion rupees, approximately $2.6 billion, in recapitalization support.
According to Sitharaman, improved management practices, financial discipline and government assistance helped revive the lender, positioning it for a new phase of expansion.
The government has maintained that bringing in a strategic investor would support the bank’s long-term growth and improve its competitiveness.
However, questions surrounding the valuation process have intensified following a report by Indian publication Businessworld alleging that government officials had deliberately lowered IDBI Bank’s assessed value to make Fairfax’s offer appear more attractive.
India’s Ministry of Finance rejected concerns about the process, maintaining that the transaction followed a double-blind bidding procedure.
Under that arrangement, prospective buyers were not informed of the independent valuation, while those conducting the valuation were not given access to the submitted bids.
The ministry said the process was designed to preserve fairness and prevent either side from influencing the final assessment.
On Monday, IDBI Bank shares opened at approximately 79 rupees, below Fairfax’s proposed acquisition price of 81 rupees per share.
The controversy comes as the Indian government accelerates its divestment program to raise funds and manage increasing fiscal pressures while supporting economic growth.
Throughout 2026, the government has reduced its holdings in several major public-sector enterprises, including Cochin Shipyard, Indian Railway Finance Corporation, NHPC and Coal India.
In August, it also raised approximately $3.3 billion through the sale of a 6.5 per cent stake in Life Insurance Corporation of India, the country’s largest life insurer.
The Fairfax-IDBI transaction represents a significant development in Canada-India investment relations, potentially expanding Canadian participation in India’s banking industry.
However, the proposed acquisition remains politically sensitive, with employees and opposition parties warning about the implications of transferring majority ownership of a public-sector financial institution to a foreign investor.
As unions prepare for industrial action, the government faces increasing pressure to defend both the valuation process and its broader privatization strategy.
The outcome of the proposed takeover could influence future foreign investment in India’s banking sector and shape the debate over the government’s continued sale of public assets.
