The Cabinet Committee on Economic Affairs (CCEA) approved the acquisition of a majority 60.72% stake in IDBI Bank by Canadian billionaire Prem Watsa's Fairfax Financial Holdings on Wednesday. In an interview with Deepshikha Sikarwar, the Department of Investment and Public Asset Management (DIPAM) secretary Arunish Chawla highlights the transaction's next steps, employee safeguards and the government's broader disinvestment and asset monetisation plans.
Edited excerpts:
There have been some comment IDBI Bank has a significant land bank and the sale value doesn't reflect that.
IDBI Bank's audited balance sheet as of March 31, 2026, shows all its assets, including land and buildings, and their book values are recorded therein.
In addition, an independent asset valuer assessed the fair replacement value of the bank's assets in accordance with prevailing market practices. The valuers personally visited the major properties, examined the relevant land documents and covenants, and conducted an independent professional valuation. The book value, as reflected in the balance sheet, is approximately ₹55-56 per share, in line with the relevant RBI guidance. The fair net asset value is significantly higher, and this is reflected in the benchmark price.
What are the immediate next steps following cabinet approval?
The first step is to communicate with the RBI and the successful bidder. The successful bidder has already submitted certain technical documents at the bidding stage. The documents relevant to the RBI will be shared with it.
The bidder will then have to appear before the RBI, fulfil any additional requirements, and obtain the necessary clearance. Only after receiving that clearance will the parties proceed to sign the share purchase agreement. The subsequent steps will include completion of the payment and transfer formalities.
Has Fairfax indicated its plans for IDBI Bank in terms of its structure?
The RBI conducted a fit-and-proper assessment at the EoI (expression of interest) stage. The prospective buyer met the fit-and-proper criteria. In fact, the group already has experience operating a bank in India, as it is associated with Catholic Syrian Bank (CSB). As part of the fit-and-proper assessment, the RBI prescribed certain conditions.
Also Read: Fairfax offers plan to resolve IDBI-CSB ownership overlapping
Since the buyer is making a substantial investment to acquire the equity, there will be a lock-in period of five years. Thereafter, there will be a glide path extending up to the 15th year to reduce the equity holding to 26%, in accordance with the applicable conditions and voting-rights framework. The buyer will now have to approach the RBI, submit its credentials and plans, and provide the required information.
It will also have to explain how it intends to restructure its existing businesses. An entity cannot hold two banking licences. The RBI has therefore stipulated that, within two years, the buyer must either merge CSB with the relevant banking entity or exit one of the businesses. The group also has other financial services businesses, including fintech-related entities and Go Digit Insurance. IDBI Bank has subsidiaries of its own. These businesses will have to be considered as part of the overall restructuring.
The objective is to create an appropriate structure through which integrated banking and financial services can be offered to customers and value can be generated. The strategic buyer will have to present this framework to the RBI and obtain its clearance. The transaction can proceed only after the required regulatory approvals are received. The preparatory work has been completed. We hope the process will move quickly and that the transaction can be concluded by the end of the current financial year.
Employee groups have expressed some concerns.
Even today, IDBI Bank is a banking company promoted by LIC, it is not a nationalised bank. The service conditions of its employees are determined by the board in consultation with employee associations. It has been agreed with the qualified bidders that the existing service conditions of serving employees will be protected. This commitment has been incorporated into the share purchase agreement.
There are also pensioners who receive pensions through the pension fund. It has been agreed with the qualified bidders that the pensions of all existing pensioners will be fully protected. Therefore, employees and pensioners need not be apprehensive about these commitments.
When a new promoter takes over, the bank will continue to operate as a going concern. The new promoter will manage the bank, and any future decisions concerning service conditions will be taken in consultation with employees and their representative associations, as applicable.
The bank is already operating as a banking company, and the existing commitments to employees and pensioners will be protected.
IDBI has taken about five years, what's next on the agenda?
We have completed five privatisations over the last five years, starting with Air India, and now IDBI Bank.
It would be inappropriate for me to disclose the details of individual transactions at this stage. However, we will continue moving ahead with the strategic restructuring of public enterprises that are in the pipeline, including those that have already received approval and those where work is underway. Work is in progress on several such transactions.
What about the asset-monetisation pipeline?
It has been on the agenda, but progress appears limited.
There are two components. The first is land monetisation or land sales, which are undertaken through the National Land Monetization Corporation (NLMC), under the relevant government framework.
The second is what we call capital recycling. This involves infrastructure assets such as highways, railways and power transmission grids, which generate revenue streams. The future revenue from these assets is capitalised, and the assets are monetised through an investment mechanism.
The proceeds are then used to create new capital assets of a similar nature. The National Highways Authority of India (NHAI) began this process on a modest scale approximately three years ago. During the financial year 2025-26, we took the process to the capital market and successfully completed the first public Infrastructure Investment Trust (InvIT) offering, which was monetised in March.
At the same time, we also monetised the sponsor capital invested in the earlier private placement. We are now working on the second public InvIT (infrastructure investment trust) offering, which we hope to complete by December and take to the market.