What are the details of the government’s sale of IDBI | Explained
The Indian government has approved the sale of a 60.72% stake in IDBI Bank to Fairfax Financial Services for ₹52,878 crore. This deal marks a significant shift in the bank's ownership, following years of government bailouts and restructuring efforts.
Why it matters
This represents a major milestone in India's banking privatization efforts and the largest foreign direct investment in the country's financial sector.
The story so far : The Union Cabinet has approved the sale of IDBI Bank to Canadian company Fairfax Financial Services, marking the largest foreign direct investment in the financial services sector in India’s history. The deal has finally brought to a close the government and Reserve Bank of India’s (RBI) varied dealings with IDBI, which have ranged from bailing it out to desperately trying to turn its fortunes around, and finally selling it.
Like many banks at the time, IDBI ended up giving loans in the mid-to-late 2000s to several entities that eventually failed to repay them, and these loans became non-performing assets (NPAs). These NPAs included loans to Kingfisher Airlines, ABG Shipyard, Winsome Diamonds, and the Videocon Group.
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