IDBI Bank’s privatisation process has reached a key milestone, with the Union Cabinet’s Committee on Economic Affairs (CCEA) approving the proposed sale of a 60.72% stake in the bank to 10955230 Canada Inc., a subsidiary of Fairfax Financial Holdings, for ₹52,878.08 crore.
According to Union Minister Ashwini Vaishnaw, the transaction, upon completion, would rank among the largest foreign direct investments in India’s financial sector.
The approval marks a significant step in the proposed change in IDBI Bank’s ownership. However, approval for the stake sale and completion of the transaction are separate stages. The deal remains subject to the necessary regulatory approvals and other formalities.
Under the proposed transaction, the central government will sell its 30.48% stake in IDBI Bank, while the Life Insurance Corporation of India (LIC) will divest its 30.24% holding. The combined stake of 60.72% will be sold for ₹52,878.08 crore.
Following completion of the transaction, the central government is expected to retain a 15% stake in the bank, while LIC is expected to hold 19%. Their combined shareholding would therefore stand at 34%. The government may also consider selling part of its remaining stake in the open market in the future.
Before control of the bank can be transferred to Fairfax’s subsidiary, the transaction must meet the regulatory requirements of the Reserve Bank of India (RBI). The buyer will also need to submit documents demonstrating its financial capacity and eligibility and obtain the necessary security clearances.
The process to divest the government’s stake in IDBI Bank began in October 2022, when expressions of interest were invited from prospective buyers. Five parties initially expressed interest, of which four were found eligible.
In a subsequent stage, two parties submitted technical and financial bids. According to the available information, the initial bids received in the financial year 2025-26 were below the government’s stipulated minimum price of ₹94.42 per share. Approval to proceed with those bids was therefore not granted. Fresh sealed bids were subsequently invited from eligible bidders in the financial year 2026-27.
Two independent agencies assessed the bank’s average fair value at ₹75.99 per share. Fairfax’s subsidiary submitted a bid of ₹81 per share, exceeding the assessed value. On this basis, its bid was considered suitable.
IDBI Bank was established in 1964 as a development financial institution and was converted into a commercial bank in 2004. Since January 2019, the RBI has classified it as a private sector bank, although the government and LIC have continued to hold substantial stakes.
The bank previously faced bad loans and financial pressure. According to available figures, the government infused approximately ₹25,000 crore of capital into the bank between 2010 and 2020.
In May 2017, the RBI placed IDBI Bank under the Prompt Corrective Action (PCA) framework. The restrictions were lifted in March 2021, subject to monitoring and stipulated conditions. The bank’s financial position subsequently improved.
