Industry Odisha Bureau, Oct 19: The ₹52,878-crore deal would hand a Fairfax unit control of a profitable lender. Its bad-loan ratio, however, remains above peers’. The new management will face employee resistance and must drive asset quality improvement.*
The Cabinet Committee on Economic Affairs last week approved the sale of IDBI Bank. A subsidiary of Canada’s Fairfax Financial is set to buy 60.7% for ₹52,878 crore. Approval, however, is not completion; the handover and integration still lie ahead.
Once Fairfax has acquired its 60.7% stake, new management will face clear challenges. It inherits a lender that earns well but has a higher bad-loan ratio than peers. The task is to protect those earnings while cleaning up the loan book.
Employee resistance is the first hurdle. The United Forum of IDBI Officers & Employees opposes the divestment. It has demanded that the stake sale be suspended. Fairfax management must turn a public-sector culture into a nimbler private-sector one. Private lenders often run on faster decisions and tighter performance targets. That shift must not unsettle staff morale or disrupt service to customers. Reforms will stall without employee cooperation.
Asset quality improvement ranks next. IDBI Bank’s gross non-performing asset (GNPA) ratio eased to 2.3% in FY26. It stood at 3% in FY25. The ratio measures soured loans as a share of total advances, before provisions. Peers still look cleaner. Federal Bank and IDFC First Bank reported 1.6% each in FY26. South Indian Bank stood at 1.4% and Yes Bank at 1.3%. Bad loans demand provisions, which eat into profits and can restrain fresh lending. Tighter underwriting and stronger recoveries could help close the gap.
Profitability, by contrast, is a strength. IDBI Bank’s return on assets (RoA) was 2.3% as of March 2026. RoA shows how much profit a bank earns from each rupee of assets. Federal Bank managed 1.2% and South Indian Bank 1.1%. Yes Bank posted 0.9%, and IDFC First Bank just 0.4%.
IDBI Bank’s net interest margin (NIM) of 3.8% also ranks high among peers. NIM measures interest earned minus funding costs, relative to interest-earning assets. Only IDFC First Bank, at 5.9%, scores higher. Yet IDFC First’s thin RoA suggests a wide margin alone does not guarantee profits. Deposit costs, lending rates and loan mix will shape IDBI’s margin under new owners.
The deal has raised hopes of a valuation re-rating for IDBI Bank. That will depend on how efficiently the change is executed. Possible levers include better technology, sharper credit checks and stronger deposit gathering. Lower costs and tighter governance could also lift returns. These are possible options rather than confirmed decisions. The risk is that investment in change dents near-term profits.
The sale is a notable test for India’s bank privatisation drive. It will show whether a public-sector legacy lender can thrive under private control. Depositor confidence and regulatory oversight will matter throughout the transition. A smooth handover could shape how future bank sales are approached. Success will rest on cleaner books, steady earnings and a cooperative workforce.
