Mumbai: The government's decision to sell a controlling stake in IDBI Bank to Fairfax Financial Holdings has raised questions among millions of customers. Many depositors want to know whether their savings accounts, fixed deposits (FDs) and money will remain safe after the bank changes ownership.
The Cabinet Committee on Economic Affairs (CCEA) approved the proposed sale on October 14, involving a 60.72 per cent stake valued at approximately Rs 52,878 crore. However, the ownership change is not expected to immediately affect existing customer accounts.
What Happens To Your Bank Deposits?
Customers holding savings accounts, current accounts, fixed deposits or recurring deposits with IDBI Bank need not take immediate action because of the proposed takeover.
The bank will continue operating under Reserve Bank of India (RBI) regulations. Existing account balances will remain unchanged merely because a new shareholder takes control.
Customers can continue using their accounts, debit cards, internet banking and other banking services unless the bank officially announces changes.
Are Deposits Safe Under Fairfax Ownership?
IDBI Bank deposits will continue to receive protection under the Deposit Insurance and Credit Guarantee Corporation (DICGC).
The insurance covers eligible deposits up to Rs 5 lakh per depositor, per bank, in the same right and capacity. This includes both principal and accumulated interest.
For example, if a customer holds Rs 3 lakh in savings and Rs 4 lakh in fixed deposits, the combined Rs 7 lakh will generally receive insurance protection of only Rs 5 lakh.
Importantly, this insurance limit is not a cap on deposits customers can maintain.
Will Fixed Deposit Interest Rates Change?
Existing fixed deposits will generally continue earning interest at the rates agreed upon when they were opened, subject to their terms.
However, the bank's new management may revise interest rates for fresh deposits and renewals as part of its future business strategy.
Floating-rate products may also see changes depending on their applicable benchmarks.
Who Will Own IDBI Bank?
Under the approved transaction, the central government will sell 30.48 per cent of its stake, while Life Insurance Corporation of India (LIC) will sell 30.24 per cent.
After completion, the government will retain 15 per cent and LIC will hold 19 per cent.
The proposed buyer must satisfy RBI's regulatory requirements before the transaction is completed.
Why Is The Government Selling IDBI Bank?
The government expects privatisation to strengthen IDBI Bank's financial independence and reduce its dependence on public funding.
The proposed Rs 52,878-crore transaction is also expected to support the government's disinvestment programme.
According to the figures cited, the Centre has already raised Rs 55,757 crore through disinvestment. Completion of the transaction could help it exceed the Rs 80,000-crore target.
What Should Customers Do Now?
Customers should rely only on official IDBI Bank communications regarding any operational changes.
They should avoid suspicious messages asking them to share passwords, OTPs or transfer money because of the takeover.
For now, the proposed ownership change does not require customers to close accounts, withdraw deposits or open new accounts.
