Cabinet clears Fairfax’s ₹58k-cr IDBI majority stake acquisition; Centre, LIC to retain minority stakes

The Union Cabinet on Wednesday approved the strategic sale of a 60.72% stake in IDBI Bank Ltd , along with the transfer of management control to Canadian financial services company Fairfax Financial Holdings Ltd for ₹52,878.08 crore, in the largest strategic disinvestment deal ever, and also the largest investment by a foreign financial services company in the country.

Of the 60.72%, 30.48% will come from the government’s holding and 30.24% from that of state-owned Life Insurance Corporation of India (LIC). Post-sale the government’s stake in the company will reduce to 15%, LIC’s to 19% . Minority retail shareholders own around 4% of the bank.

Fairfax is founded by Prem Watsa, a Canadian businessman of Indian origin who was born in Hyderabad and graduated from the Indian Institute of Technology, Madras. The company owns the majority stake in CSB (formerly Catholic Syrian Bank), but, as part of its bid for IDBI, has already said it will divest that holding to meet Reserve Bank of India requirements.

Without disclosing the name of the strategic partner and the amount involved in the transaction, information and broadcasting minister Ashwini Vaishnaw said in a briefing on Wednesday that “the decision paves way for largest FDI [foreign direct investment] in financial services in India.”

The restructuring of IDBI will help in meeting capital requirements of micro, small and medium enterprises (MSMEs), he added. The Government of India and LIC together will hold 34% equity stake in IDBI Bank post restructuring, the minister said. A stake of 26% is usually adequate to block special resolutions.

“The decision of the CCEA [Cabinet Committee on Economic Affairs] was implemented through a two-stage, competitive bidding process supported by a multi-layered, collective decision-making mechanism consisting of the Inter-Ministerial Group (IMG), the Core Group of Secretaries on Disinvestment (CGD) and the Alternative Mechanism (AM) consisting of an empowered Group of Cabinet Ministers,” the finance ministry said in a statement on the stake sale.

CCEA on May 5, 2021 gave its in principle approval for the strategic disinvestment along with transfer of management control in IDBI Bank Ltd. It left the quantum of stake sale to the Union government and LIC , in consultation with the Reserve Bank of India (RBI). Even though the Union government and LIC together hold 94.72% equity stake in IDBI Bank, the bank was classified as a private sector one by RBI with effect from January 21, 2019.

The government initiated the process of stake sale soon after CCEA’s decision. The Preliminary Information Memorandum (PIM) for inviting Expression of Interest (EoI) from potential bidders was published on October 7, 2022. In response , the government received multiple Expressions of Interest (EOIs) .

These EOIs were sent to Ministry of Home Affairs (MHA) for security clearance and RBI for so-called “‘fit and proper” assessment. Of the five parties who initially submitted their EoIs, four qualified as per the eligibility criteria and disqualification conditions prescribed therein, of which, two finally submitted their techno-financial bids and became Qualified Bidders (QBs) .

After comprehensive evaluation, CCEA in its meeting held on October 14, 2026 “approved M/s 10955230 Canada Inc. (parent entity M/s Fairfax Financial Holdings Ltd.) as the Strategic Buyer for this Transaction” for a purchase consideration of ₹52,878.08 crore for the acquisition of 60.72% stake (of the government and LIC combine) in the IDBI Bank, the finance ministry’s statement said.

According to the statement, the winning bid was ₹81 per share, above the benchmark fair value of ₹75.99 per share as per calculation done by two independent valuation agencies using market-multiple and asset-valuation methods. Shares of IDBI Bank closed at ₹90.44 per share, up 9% on Wednesday..

The successful bidder will be required to present its credentials to RBI in accordance with the “Fit and Proper Assessment” conducted at the EoI stage and submit its roadmap for the compliance of regulatory conditions prescribed therein, the statement said. “Once completed, this will be the largest FDI in the financial sector of our economy so far,” the finance ministry said.

IDBI Bank is a scheduled commercial bank regulated by RBI. Due to its poor financial health, the bank required repeated infusion of capital, initially provided by the government and later by the LIC. On May 5, 2017, RBI put IDBI Bank under the Prompt Corrective Action Framework and imposed several restrictions in view of its non-performing assets and losses . After considering the improvement in the bank’s financial health, RBI in 2021, lifted these restrictions.

“Propelled by Hon’ble Prime Minister Shri @narendramodi’s visionary leadership, India’s reform trajectory reaches another milestone today with the CCEA’s approval of IDBI Bank’s strategic restructuring,” Union finance minister Nirmala Sitharaman said in a post on X.

“Having supported the bank’s recovery, we are now enabling its next phase of growth through the infusion of Foreign Direct Investment while retaining a minority stake. This will not only strengthen the banking ecosystem but also help banking services surpass global benchmarks,” she said.

“It reinforces that India’s growth story is strong, its economy is resilient, and the government’s commitment to reform is unwavering,” Sitharaman said. “With an unshakable resolve toward economic transformation, we are shaping a future-ready financial sector dedicated to empowering customers, backing entrepreneurs, and fuelling the vision of a Viksit Bharat,” she added.

“This is part of the banking sector reform. The strategic buyer may not only infuse funds and new technology but also bring best management practices in the sector,” said Abhishek A Rastogi, founder of Rastogi Chambers.

The government infused around ₹25,000 crore capital in IDBI Bank between 2010-2020. The bank’s gross NPA was 31.78% in September 2018. This came down to 2.32% in March 2026, according to government data. The bank’s net NPA is also reduced significantly -- from 17.30% in September 2018 to 0.15% in March 2026.

The bank’s capital adequacy ratio rebounded from a distressed 6.22% in 2018 to 26.65% in March 2026. The bank recorded a net profit of ₹9,513 crore in FY26.