The Union Cabinet has approved the sale of a 60.72% stake in IDBI Bank to Canada-based Fairfax Financial Holdings for about ₹52,878.08 crore. Once completed, the transaction will become the largest foreign direct investment in India’s financial sector.
What the deal includes
The Cabinet Committee on Economic Affairs approved Fairfax as the strategic buyer of IDBI Bank. The 60.72% stake being sold includes the government’s 30.48% holding and LIC’s 30.24% stake.
After the sale, the Centre will retain a 15% stake in IDBI Bank, while LIC will hold 19%. The government and LIC will therefore continue to have a combined 34% shareholding in the bank.
Price and valuation
Fairfax will pay ₹81 per share for the stake. This is higher than the benchmark valuation of ₹75.99 per share fixed by two independent valuation agencies.
The valuation was based on the market-multiple method and an asset-based assessment of IDBI Bank’s assets and liabilities as on March 31, 2026. The government said market-price volatility was not considered because IDBI Bank shares are thinly traded.
Regulatory approvals
The successful bidder will have to submit its credentials to the Reserve Bank of India under the fit-and-proper assessment process. Fairfax will also need to present a roadmap for meeting all regulatory conditions before the transaction can be completed.
The sale was conducted through a two-stage competitive bidding process supervised by an Inter-Ministerial Group, the Core Group of Secretaries on Disinvestment, and an empowered group of Cabinet ministers.
Why IDBI Bank was sold
IDBI Bank had earlier required repeated capital support from the government and LIC. In 2017, the Reserve Bank of India placed the lender under its Prompt Corrective Action framework due to high bad loans and losses.
After the bank’s financial position improved, the RBI removed those restrictions in March 2021, subject to continued monitoring. The government then moved ahead with the strategic sale of the bank.
What happens next
The Cabinet has also allowed the Alternative Mechanism to sell the government’s remaining 15% stake in IDBI Bank through the open market, following standard procedures. LIC will be able to manage its remaining 19% stake according to its internal policies and regulatory directions.
The approval marks a major milestone in India’s privatisation programme and is expected to bring private-sector management control to IDBI Bank after the deal is completed.
