New Delhi [India], October 16 (ANI): The service conditions of existing employees and pensioners of IDBI Bank will remain unchanged after its disinvestment, Department of Investment and Public Asset Management (DIPAM) Secretary Arunish Chawla said on Friday.

In an exclusive conversation with ANI on the restructuring of IDBI Bank, Chawla said that a separate pension fund had been established for existing pensioners and would be fully maintained. The undertakings regarding existing employees' service conditions and pension benefits have been included in the share purchase agreement.

'Under the share purchase agreement, the qualified parties have also agreed that the service conditions of existing employees will remain unchanged...Existing employees and existing pensioners should have no apprehensions, as their service conditions have been fully protected,' Chawla told ANI.

The Union Cabinet on Wednesday approved a Rs 52,878 crore (USD 5.56 billion) deal to sell a 60.72 per cent controlling stake in IDBI Bank to a subsidiary of Canada's Fairfax Financial Holdings.

Under the proposed transaction, the government will sell its 30.48 per cent stake, while Life Insurance Corporation of India (LIC) will divest 30.24 per cent, leaving the government with a 15 per cent stake and LIC with 19 per cent.

Shedding more details on the deal, Secretary Chawla highlighted that Fairfax Financial Holdings already operates Catholic Syrian Bank, while its other financial services businesses include IIFL, a wealth management company, and Go Digit, an insurance company.

According to Chawla, the Reserve Bank of India (RBI) has directed Fairfax Financial Holdings to either merge Catholic Syrian Bank with IDBI Bank or exit from it within two years, as one entity can operate only one banking licence on a permanent basis.

He said the subsidiaries of both the bank and the buyer would also have to be restructured and brought under IDBI Bank's umbrella within the next two years.

'This will help create value and enable customers to access integrated services through the bank,' he said, adding that the move would improve efficiency and would not adversely affect competition in the banking sector.

Chawla also said around 30 large, medium-sized and small banks operate in India, across both the public and private sectors. He expressed confidence that the restructuring would support integrated financial services without limiting competition.

On the valuation of IDBI Bank for the deal, Chawla said the government appointed several professional advisers, including transaction, legal and valuation advisers. Two independent valuation advisers used globally accepted separate methodologies to determine the bank's value.

He said only 5.3 per cent of IDBI Bank's shares were traded in the stock market, while its share price had fluctuated between Rs 61 and Rs 118 over the preceding six to eight months, reflecting high volatility.

One adviser used the market multiples method to compare the bank's fundamentals with those of comparable enterprises. The second used the asset valuation method, examining the bank's audited balance sheet as of March 31, 2026, its properties and intangible assets, including its banking licence and brand value.

The average of the fair market value and fair asset value was used to determine the benchmark price.

According to Chawla, the winning bid was higher than the benchmark price and both independently determined fair values.

Explaining the next steps, he said the successful bidder would have to submit compliance details to the RBI to meet the conditions imposed during its fit-and-proper assessment. Following RBI clearance, the share purchase agreement would be signed, and the required payment would have to be completed within the stipulated three-year period.

Chawla described the transaction as a milestone for India's banking and financial sector, saying it would bring private-sector efficiency and management practices into a major banking institution.

He also said the deal, valued at USD 5.6 billion, would bring significant foreign exchange into the country. Calling it the largest foreign direct investment transaction in India's financial sector so far, he said the government would continue the strategic restructuring of enterprises that are non-strategic in nature. (ANI)