Cabinet approves sale of 60.72% of IDBI Bank to Fairfax for ₹52,878 crore

The Cabinet Committee on Economic Affairs on Wednesday, October 14, approved the sale of a 60.72% stake in IDBI Bank to a subsidiary of Canada's Fairfax Financial Holdings for ₹52,878 crore, the government announced. It described the deal as a strategic restructuring and as the largest foreign direct investment in India's financial sector.

The terms

According to The Hindu, the stake comprises 30.48% held by the government and 30.24% held by the Life Insurance Corporation of India (LIC). It leaves the government with 15% and LIC with 19%. Before the sale the government held 45.5% and LIC 49.2%. The government said two parties finally qualified to bid and that Fairfax's winning bid was ₹81 per share. The buyer named is M/s 10955230 Canada Inc., whose parent is Fairfax, Mint reports, citing the finance ministry.

The Hindu reports that the price compares with a benchmark fair value of ₹75.99 per share set by two independent valuation agencies. Mint reports that, under the terms, both co-promoters will withdraw their nominee directors from the board. It also reports that the ministry said the stock price had ranged between ₹61.01 and ₹118.38 during the valuation period and that limited trading made the market price an unreliable guide, so a market multiple method was used.

The Indian Express reports that completion is expected by March 2027, that Fairfax's agreement runs for three years, requiring the bank to keep its name, and that its invested capital is locked in for five years. It says Fairfax must cut its stake to 26% over 15 years, on a path to be agreed with the Reserve Bank of India (RBI), and LIC must reduce its 19% to 15% within two years of completion. Finance Minister Nirmala Sitharaman said, according to the report, "It is not a disinvestment, but a restructuring."

CSB Bank overlap and approvals

The Indian Express reports that Fairfax already owns 40% of CSB Bank through a subsidiary, and that because one promoter cannot own two banks, it must within two years either merge CSB Bank with IDBI Bank or exit CSB. The Hindu reports that the deal still needs RBI approval under its fit and proper assessment, as well as approval from the Competition Commission of India and other statutory authorities.

Background on the bank

The Hindu reports that IDBI Bank was placed under the RBI's Prompt Corrective Action framework in 2017, and that LIC took a controlling stake in January 2019 by investing ₹21,624 crore, after which the RBI classified it as a private bank. The bank's gross non-performing asset ratio fell from 31.8% in September 2018 to 2.3% in March 2026, and it reported a net profit of ₹9,513 crore in 2025-26. An unnamed finance ministry official said no depositor or borrower is affected and that deposits remain insured up to ₹5 lakh.

Reaction and market moves

Mint reports that the United Forum of IDBI Officers and Employees opposes the sale to a foreign entity. It demanded suspension of further steps, disclosure of the valuation method, and parliamentary scrutiny, and said it would approach the courts. The Indian Express reports that IDBI officers and the employees union have said the price is too low.

IDBI Bank shares rose 9% to close at ₹90.39 on the NSE on Wednesday, before the announcement, according to The Indian Express (Mint gives ₹90.44). The Hindu, citing PTI, reports they fell 7.5% to ₹83.62 on Thursday, October 15. The Indian Express reports that the Centre has raised ₹55,757 crore from disinvestment so far against a target of ₹80,000 crore for 2026-27.