The successful bidder will submit technical papers and its credentials to the RBI, including details needed to meet additional compliance and regulatory requirements. After the RBI grants clearance, the share purchase agreement will be signed, paving the way for the transaction to be completed this financial year.
After the agreement is signed, the strategic buyer will have to make an open offer to minority shareholders, allowing them to tender their shares under applicable regulations.
Chawla said the market regulator had also directed Life Insurance Corporation of India to reduce its stake in IDBI Bank from 19 per cent to 15 per cent after the divestment. This would increase the bank's public float by four percentage points and make more shares available to retail investors and other public shareholders.
Fairfax will buy the government's 30.48 per cent stake for about ₹26,620 crore and LIC's 30.24 per cent stake for about ₹26,440 crore. The Prem Watsa-led company will pay ₹81 per share, above the benchmark fair value of ₹75.99 determined by two independent valuation agencies.
Chawla described the restructuring as the largest strategic transaction and said it would attract the highest foreign direct investment. The sale process began in 2022 and suffered a setback earlier this year when initial bids were below the government's reserve price.
Addressing employees' concerns, Chawla told Business Today in an interview, "The service conditions will be fully protected. The bank also has pensioners. Their pension benefits will be protected, there is a dedicated pension fund set aside for the purpose."
Addressing concerns of bank unions and IDBI Bank employees over the sale of controlling stake in the bank, he said that the employees and pensioners have nothing to fear.
He added, "The bank is being strategically restructured as a going concern. It will continue to be a board-run company and the management will continue to negotiate with the employees." He also said, "IDBI Bank is a banking company which is being restructured as a going concern."
Banking and insurance employee unions have opposed the Cabinet's decision. The United Forum of IDBI Bank Officers and Employees sought a review, saying, "The public deserves evidence that a national asset is not being transferred at a throwaway price."
The United Forum of Bank Unions, which says it represents 90 per cent of the banking workforce through seven unions, called the move not only "privatisation" but also "foreignisation" and asked members to wear black badges on October 16.
Chawla said the restructuring would be completed this financial year after RBI approval, with safeguards for employees, pensioners and public shareholders. He added that the strategic restructuring of central public sector enterprises would continue and the existing stake-sale pipeline would be taken to its logical conclusion.