Cabinet Clears Sale of 60.72 Percent Stake in IDBI Bank to Fairfax

The Cabinet Committee on Economic Affairs approved on 14 October 2026 the sale of a combined 60.72 percent stake in IDBI Bank to a subsidiary of Fairfax Financial Holdings for Rs 52,878.08 crore. The price works out to Rs 81 per share.

The government will sell 30.48 percent of its holding. Life Insurance Corporation of India will sell 30.24 percent. After the transaction the government will retain 15 percent and LIC will retain 19 percent. An empowered group of ministers can later sell the government's remaining 15 percent through the open market.

Fairfax's bid exceeded the average fair value of Rs 75.99 per share calculated by two independent valuation agencies. The agencies used market-multiple and asset-valuation methods. Department of Investment and Public Asset Management secretary Arunish Chawla said the winning bid was reasonable and above both the benchmark and the agencies' estimates.

Finance Minister Nirmala Sitharaman described the deal as the largest foreign direct investment in India's financial sector. The transaction is expected to close in the current financial year once the Reserve Bank of India grants clearance. DIPAM has said the interests of employees, pensioners and minority shareholders will be protected.

The sale will lift the government's disinvestment and asset monetisation proceeds for the year past Rs 88,000 crore. That figure exceeds the budgeted target of Rs 80,000 crore. The government had already collected Rs 62,124 crore before the IDBI transaction. The proceeds arrive in a year of higher subsidy costs linked to energy prices.

IDBI Bank shares fell nearly 8 percent to Rs 83.33 on 15 October after the announcement. The sale price of Rs 81 sat below the previous close of Rs 90.44 and below market expectations of Rs 100 to Rs 110. Analysts said the deal removes uncertainty but future returns will depend on the bank's operating performance under new ownership.

Fairfax has said it will reduce its stake to 26 percent over 15 years to meet regulatory limits. It will have 10 years to bring the holding down from roughly 60 percent to 40 percent, then another five years to reach 26 percent. Prem Watsa, Fairfax chairman, also said the group has two years to decide the future of its 40 percent stake in CSB Bank. Options include a merger with IDBI or a sale.

The process began with Cabinet approval for divestment in 2021. Earlier bid rounds did not meet the government's reserve price. The transaction includes an open offer that gives minority shareholders an exit option. Fairfax plans to contribute interests in Go Digit Life Insurance, Go Digit General Insurance and IIFL Capital Services to the bank after acquiring control.

The deal leaves the bank with a more diversified set of businesses that could include banking, insurance, wealth management and investment banking. Regulatory clearance from the Reserve Bank remains the final major step. Chawla said the sale is expected to finish before the end of the current fiscal year.