Bank Deal: Major Indian bank set for sale to Canadian billionaire; do you have an account there?

Bank Deal: The government is set to privatize IDBI Bank soon—a move that has been under discussion for some time. Reports suggest that Canada-based Fairfax has emerged as the frontrunner for this deal.

Bank Deal: The government has been planning the privatization of IDBI Bank for a while, and this process is now nearing completion. According to various media reports, Indian-origin billionaire Prem Watsa could soon officially become the bank's owner, as he has submitted the highest bid to the government for its acquisition.

Company submits proposal

Fairfax Financial Holdings, the company owned by Indian-origin Canadian billionaire Prem Watsa, has shown significant interest in acquiring IDBI. The company has submitted a proposal valued between $5.5 billion and $5.7 billion (approximately ₹47,000–₹49,000 crore) to acquire the bank.

This would mark one of the largest foreign investments in India's banking sector to date. However, the government has not yet made a final decision, and the proposal is currently under consideration.

Why is the bank being sold?

IDBI is a private-sector bank in which the government and LIC hold a combined 60.7% stake—a share they intend to sell. Currently, the government holds approximately 45.5% of the bank, while LIC holds 49.2%. This decision stems from the fact that, a few years ago, IDBI Bank was grappling with bad loans (NPAs) and a weak financial position. In 2018, the RBI had even placed the bank under its Prompt Corrective Action (PCA) framework.

However, the bank has since reduced its bad loans, increased profits, and improved its financial health, making it an attractive prospect for global investors. Two companies—Fairfax Financial Holdings and Dubai’s Emirates NBD—have placed bids for the bank.

How will this affect customers?

Even if Fairfax acquires a stake in the bank, there will be no major immediate changes for ordinary customers. Bank branches, deposits, loans, and other banking services will continue as before. Currently, the government is reviewing the bids from both companies, and a decision on the deal will be made only after final approval is granted.