The Indian government has officially sold a controlling 60.72% stake in IDBI Bank to Fairfax, a Canadian private company, for a massive ₹52,878 crore. In this massive privatization move, both the government and LIC sold roughly 30% of their shares, retaining a combined residual stake of 34%.
Who is the Buyer?
Fairfax is owned by Prem Watsa, an IIT Madras alumnus born in Hyderabad, who is often referred to as "Canada's Warren Buffett". This is not Fairfax's first venture into the Indian banking sector; the company already holds a stake in Kerala-based CSB Bank.
Profitable Bank Sold at a Discount?
IDBI is a massive financial institution boasting over 2,100 branches, more than 3,000 ATMs, and roughly ₹3.5 lakh crore in customer deposits. Far from being a failing enterprise, the bank posted a profit of around ₹9,500 crore last year. Curiously, while IDBI's market share price was trading near ₹90, the deal was finalized at approximately ₹81 per share—an 11% discount.
Are Your Bank Deposits Safe?
Following the privatization of entities like Air India, Hindustan Zinc, and VSNL, this sale raises critical questions about depositor safety. Under DICGC rules, if any bank defaults, insurance only guarantees a maximum payout of ₹5 lakh per person per bank. Whether you hold ₹2 crore or ₹20 crore in your account, your protected limit remains ₹5 lakh.