SO, a decision has finally been reached! The Industrial Development Bank of India (IDBI), established to drive India's industrial growth and economic foundation, is now slipping completely out of Indian hands and into the control of foreign capital. If implemented, the decision approved by the Union Cabinet on October 14, 2026, will place this institution, which holds a pivotal place in India's economic development history, under the control of Canada-based Fairfax Financial Holdings. This is the latest example of the irony wherein a regime that claims to protect public sector enterprises hands over their ownership to foreign capital.

The official transaction figures itself reveal the sheer scale of this decision. The transfer involves a total of 60.72 per cent of the shares, comprising 30.48 per cent held by the Central Government and 30.24 per cent held by the public sector institution, Life Insurance Corporation (LIC). The transaction value has been fixed at Rs 52,878.08 crore, with approval granted at a rate of Rs 81 per share. However, one point must be clarified; this is currently a Cabinet-approved decision, and the share transfer is not yet complete; further procedures, including regulatory approval from the Reserve Bank of India, remain pending.

FROM A DEVELOPMENT FINANCIAL INSTITUTION TO A PRIVATE BANK

IDBI was established as a Development Financial Institution (DFI) on July 1, 1964. Its core objectives were to provide long-term financial assistance required for the country's industrial growth, promote industrial development, and build the financial foundation necessary for economic progress.

Later, major changes took place in the structure and operations of the institution. On October 1, 2004, IDBI transitioned into a banking institution. Following the new generation private banking culture that began in 1993, IDBI Bank was formed as a "new public sector bank." Subsequently, in 2005, IDBI Ltd. was merged into IDBI Bank Ltd., effectively erasing the distinction between a development financial institution and a commercial bank. These changes went far beyond mere names or organisational structures. It represented a shift from the specific mandate of providing long-term financing for India's industrial development to the generalised operational methods of commercial banking.

Over time, the bank's financial distress and non-performing assets (NPAs) mounted. On May 5, 2017, the Reserve Bank of India placed IDBI under the Prompt Corrective Action (PCA) framework, imposing strict regulatory restrictions related to loan quality, losses, and financial health. These restrictions were lifted on March 10, 2021. Over the past three financial years (2023–24, 2024–25, and 2025–26), the bank has generated net profits of Rs 5,600 crore, Rs 7,500 crore, and Rs 9,600 crore, respectively. Today, public deposits totaling Rs 3,50,000 crore rest within the bank. This history reminds us of a fundamental truth; addressing the financial crisis of a public sector institution and handing over its ownership to private capital are two entirely different matters. The former can be accomplished while safeguarding public interest; the latter raises the basic question of who commands the institution's control and future policies.

LIC'S FUNDS AND THE GOVERNMENT'S WITHDRAWAL

As part of measures to overcome IDBI's crisis, LIC acquired a majority stake in the bank in January 2019, bringing its shareholding up to 51 per cent effective January 21, 2019. Subsequently, the bank's shareholding structure underwent further changes.

Following this, the Union Government adopted a stance of absolving itself of responsibility by treating the bank as no longer belonging to the public sector, despite having used the funds of another public sector institution to rescue it. LIC's funds are inherently tied to the savings of the general public, and it is an institution duty-bound to protect the interests of crores of policyholders across the country. Using such an institution to make investments in a bank, and then utilising those very shares to privatise the bank's ownership, raises serious questions regarding the stewardship of public wealth.

If LIC's investment was meant to rescue the bank, why should its control be handed over to foreign capital once the bank regained financial health? Who benefits when an institution rescued from crisis using public money is ultimately transferred to private capital? Such questions demand clear answers.

FROM CSB TO IDBI: THE SAME INVESTOR, DIFFERENT SCALES

To understand Fairfax's investment interests and its footprint in the banking sector, one only needs to examine the history of Kerala's own CSB Bank. Established in Thrissur in 1920, the Catholic Syrian Bank holds an important place in Kerala's banking history. Comparing the experience at CSB Bank with the current decision to sell IDBI Bank highlights stark differences. Fairfax acquired a 51 per cent stake in Catholic Syrian Bank, a symbol of Kerala's identity, for 1,210 crore rupees in February 2018. In June 2024, Fairfax India Holdings divested 9.7 per cent of its stake in CSB Bank through the market, raising approximately 595 crore rupees and reaping massive profits. Following Fairfax's entry, even the bank's name was altered, dropping its historical identity to become simply "CSB Bank." Its lending structures were entirely overhauled, narrowed down primarily to gold loans and corporate lending while priority sector lending diminished. The underlying purpose behind the influx of foreign capital was clearly demonstrated through CSB Bank.

A foreign investor acquires a majority stake in a bank, later offloads a portion of it in the market, and extracts financial gains. This is the very nature of private investment; invest, augment value, recalibrate equity holding, and reap economic returns. While this may not be illegal, the vital distinction remains that the objectives of a public sector institution and those of a private investor are fundamentally different.

Fairfax is now preparing to swallow IDBI, one of the country's largest financial institutions. As of March 31, 2026, IDBI's total business volume exceeds 6 lakh crore rupees, whereas CSB Bank's total business (deposits and net advances) stands at roughly 84,094 crore rupees. Therefore, the magnitude of IDBI's sale dwarfs that of the CSB equity transaction. Handing over the bank's control to foreign capital impacts not only the future of its depositors and borrowers but also the critical role the bank plays in the nation's financial policy.

In the case of IDBI, the Cabinet has approved the transfer of majority shares held jointly by the Central Government and LIC. According to official announcements, once the transaction is completed, the government will retain a 15 per cent stake and LIC a 19 per cent stake. However, with majority ownership and control surrendered, these remaining stakes will fall short of preserving public sector control.

THE VALUATION OF RS.81 AND THE WORTH OF PUBLIC WEALTH

Approval has been granted to sell a 60.72 per cent stake at the rate of rupees 81 per share. The Union Government's official explanation notes that independent agencies calculated a fair value of 75.99 rupees per share, making the bidding price of rupees 81 higher than that estimate. However, calculating the value of a share and evaluating the strategic public role of an institution are two entirely different exercises. Beyond market capitalisation, assets, liabilities, and future profit potential, one must also account for a bank's role in mobilising public savings, extending credit to industries and small enterprises, and maintaining stability during financial crises. Achieving a price higher than the government's estimated valuation does not automatically render the sale beneficial to the public interest. A clear comparison must be drawn between the one-time revenue generated by selling an institution and the long-term benefits the country and public could derive from its future operations.

WILL FOREIGNISATION STOP AT JUST ONE BANK?

The sale of IDBI lends new urgency to the concerns raised by trade unions regarding privatisation in the banking sector. It can be seen as the next phase in a policy that progressively shrinks the footprint of public sector banks while expanding the share of private capital. Foreign investment is not new to the Indian banking sector. However, there is a vast difference between a foreign investor making an investment in a bank and taking over the majority ownership and control of a vital national bank.

Banks are not mere commercial enterprises driven solely by profit. They are institutions that mobilize public savings and distribute them as credit. Banking policies exert massive influence over agriculture, small-scale industries, education, housing, self-employment, and infrastructure development. Private owners may naturally prioritise more lucrative sectors. Public sector banks, however, carry social and economic responsibilities. When public sector control is lost, how will these responsibilities be safeguarded? This is a paramount policy question. Therefore, the sale of IDBI cannot be viewed merely as a routine share transfer of a single bank; it must be evaluated as part of a larger conversation concerning the nation's economic sovereignty and the future of its banking sector.

THE TRUE TEST OF PATRIOTISM

Those currently governing the country are the very ones who chant mantras of patriotism in their speeches. At a time when democracy itself is under question, and when the nation's youth stand on the path of massive protests in the national capital, self-proclaimed patriots have chosen to hand over IDBI Bank, a repository of public wealth, to foreign capital.

The history of IDBI highlights this stark irony; it was formed as a development financial institution, converted into a new commercial bank, weathered a financial crisis, found revitalization through LIC's investments, and finally achieved growth in profit and business volume. Now, at the height of that growth, a decision has been enacted to hand over its majority shares to foreign capital. Policies that question the efficiency of public sector banks when they face losses, yet rush to sell them off when they turn profitable, must be challenged. When deciding the future of institutions built using public savings, we must ask what priority is being accorded to the people's interests.

Safeguarding the nation's economic security and the social responsibilities of public sector banks requires open, widespread public discussions regarding such decisions. Trade unions, bank employees, depositors, and the general public must articulate their stances. The hypocrisy of preaching patriotism while surrendering the nation's economic foundation, its public wealth, to private and foreign capital must be thoroughly exposed. The struggle to protect the public wealth built by the sweat and savings of ordinary people is an imperative of our time.