Samajwadi Party chief Akhilesh Yadav on Wednesday launched an attack on the BJP-led government over the proposed sale of a majority stake in IDBI Bank to Canada's Fairfax Financial Holdings, accusing it of putting the country's assets up for sale. Finance Minister Nirmala Sitharaman hit back, questioning the SP's record during the Congress-led United Progressive Alliance (UPA) government, which it supported.
Reacting to the Cabinet's approval of the Rs 52,878-crore deal, Yadav took a swipe at the government on X, saying it appeared to be selling off public assets as it approached the end of its tenure.
"Now, all that's left is for the government to sell itself... It seems like the BJP government, seeing its shop about to shut down, has planned to put up a 'Season End Sale' sign and sell everything off before making a quick exit," Yadav wrote.
Sitharaman responded by questioning the Samajwadi Party's record during the Congress-led United Progressive Alliance (UPA) government, which it supported from 2004.
"Since 2004, your party's support was extended to the UPA. Given the dire state in which the UPA left the banks, it's surprising that you're talking about banks today, when back then you didn't even raise a single question with your allied parties!" she said in a post on X.
The Finance Minister accused the UPA government and its allies of weakening public sector banks through what she described as "phone banking" and "crony capitalism". She said IDBI Bank had extended loans during the UPA years that the banking system was still struggling to recover, including the principal and interest.
Sitharaman credited the Narendra Modi-led National Democratic Alliance (NDA) government with reviving IDBI Bank and the wider banking system through capital infusion and transparent policies.
"It's astonishing—now that the banks' position has been strengthened, why are you feigning this false sympathy? Why these crocodile tears?" she asked.
CABINET APPROVED RS 52,878-CRORE IDBI BANK STAKE SALE
The political exchange followed the Union Cabinet's approval of the sale of a combined 60.72 per cent stake in IDBI Bank to Fairfax Financial Holdings, led by Canadian billionaire Prem Watsa.
The Cabinet Committee on Economic Affairs (CCEA), chaired by Prime Minister Narendra Modi, approved Fairfax subsidiary 10955230 Canada Inc as the strategic buyer for the government's 30.48 per cent stake and Life Insurance Corporation of India's (LIC) 30.24 per cent stake.
The transaction is valued at Rs 52,878 crore, with Fairfax set to pay Rs 81 per share. This is higher than the benchmark fair value of Rs 75.99 determined by two independent valuation agencies.
The proposed transaction would transfer control of IDBI Bank to Fairfax, subject to regulatory approvals and completion of the sale. The government and LIC will together retain a 34 per cent stake in the restructured entity, according to the government's announcement.
The government described the transaction as the largest foreign direct investment in India's financial sector to date.
SITHARAMAN CALLS DEAL A MILESTONE IN BANKING REFORMS
Earlier on Wednesday, Sitharaman said the CCEA's approval marked another milestone in India's economic reform programme. She said the government had supported IDBI Bank's recovery and was now enabling its next phase of growth through foreign investment while retaining a minority stake.
In a post on X, the Finance Minister said the proposed restructuring would strengthen India's banking system and help banking services meet global benchmarks.
She also linked the transaction to the government's broader reform agenda, saying it reflected the resilience of the Indian economy and its commitment to building a financial sector that supports customers and entrepreneurs.
The proposed sale is part of the government's effort to reduce its ownership of state-controlled enterprises and attract private capital into the banking sector.
DEAL AWAITS RBI, CCI AND OTHER REGULATORY APPROVALS
Although the Cabinet has approved Fairfax as the strategic buyer, the transaction is not yet complete. It requires approval from the Reserve Bank of India (RBI), the Competition Commission of India (CCI) and other statutory authorities.
The RBI will conduct a "fit and proper" assessment of Fairfax. The buyer must present its credentials and a roadmap for meeting the regulator's requirements before the sale can be finalised.
Fairfax will also have to make an open offer to public shareholders unless the Securities and Exchange Board of India (Sebi) waives the requirement.
Under RBI norms, promoters can hold no more than 26 per cent of a bank. Department of Investment and Public Asset Management (DIPAM) Secretary Arunish Chawla said Fairfax would have up to 15 years to comply with the condition. A five-year lock-in period will apply to the promoter.
Fairfax currently holds a 40 per centstake in Kerala-based CSB Bank. It will have to either merge CSB Bank with IDBI Bank or exit its investment in the lender.
The new promoter will also have to retain IDBI Bank's name, brand and customer relationships for at least three years, Chawla said.
The government has said employees need not worry about the transaction, adding that the transfer of management has been discussed with stakeholders. LIC will also have to reduce its stake in IDBI Bank from 19 per cent to 15 per cent within two years.
The transaction is expected to be completed before the end of the 2026-27 financial year. Once it is completed, the government will exit IDBI Bank's board.
A MAJOR TEST FOR INDIA'S BANKING PRIVATISATION DRIVE
The IDBI Bank sale process began in 2022 and faced a setback earlier this year when initial bids fell below the government's reserve price. The latest approval marks a significant step towards completing the long-delayed privatisation.
The deal is larger than several recent cross-border transactions in India's financial sector. These include Emirates NBD's acquisition of a 60 per cent stake in RBL Bank, valued at around USD 3 billion, and Japan's MUFG Bank acquiring a 20 per cent stake in Shriram Finance for Rs 39,618 crore.
The proposed transaction could also set a precedent for the privatisation of other state-owned lenders, where government ownership remains substantial. It will test foreign investors' appetite for acquiring control of a major Indian bank while meeting the country's regulatory requirements.
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