Cabinet Approves Rs 52,878 Crore Sale of 60.72 Percent Stake in IDBI Bank to Fairfax

The Cabinet Committee on Economic Affairs approved the sale of a 60.72 percent stake in IDBI Bank to 10955230 Canada Inc., a subsidiary of Fairfax Financial Holdings, for Rs 52,878 crore on 14 October 2026. The transaction is the largest foreign direct investment in India’s financial sector to date.

The government will sell 30.48 percent of its holding and the Life Insurance Corporation of India will sell 30.24 percent. After the deal, the Centre will retain 15 percent and LIC will keep 19 percent. The winning bid was Rs 81 per share, above the benchmark fair value of Rs 75.99 calculated by two independent valuers. Shares of IDBI Bank closed at Rs 90.44 on the day of the announcement, up 9 percent.

DIPAM Secretary Arunish Chawla said the proceeds will be split roughly equally, giving the government about Rs 26,500 crore and LIC about Rs 26,300 crore. The government has already collected Rs 62,124 crore from disinvestment and asset monetisation this fiscal. The IDBI sale will push the total above Rs 88,000 crore, exceeding the Rs 80,000 crore target for 2026-27. Finance Minister Nirmala Sitharaman described the deal as a restructuring rather than a pure disinvestment because the government remains invested.

IDBI Bank’s gross non-performing asset ratio fell from 31.78 percent in September 2018 to 2.32 percent in March 2026. The bank returned to profitability after years of capital infusions. The process began with Cabinet approval for divestment in 2021. Earlier bids were rejected; fresh offers were invited after a revaluation. Fairfax, led by Prem Watsa, plans to transfer its interests in Go Digit Insurance and IIFL Capital Services to the bank, subject to Reserve Bank of India approval.

An empowered group of ministers headed by Sitharaman has authority to sell the residual 15 percent government stake later through the open market. The transaction is expected to close in the current fiscal year. Depositors remain protected by DICGC insurance up to Rs 5 lakh. The RBI will continue to regulate the bank under the new ownership.

Minority shareholders hold about 4 percent. No detailed schedule for management transition or board changes has been published beyond the requirement for regulatory clearances.