The Cabinet Committee on Economic Affairs has approved the sale of a 60.72% stake in IDBI Bank Ltd to Fairfax Financial Holdings Ltd (through its subsidiary 10955230 Canada Inc.) for Rs 52,878.08 crore. The transaction marks the largest foreign direct investment in India’s financial sector to date and concludes a strategic restructuring of the bank initiated after years of financial distress.
IDBI Bank, a scheduled commercial bank regulated by the Reserve Bank of India, had been struggling with accumulated losses and high non-performing assets, forcing repeated capital injections from the Government of India and Life Insurance Corporation (LIC). The bank was placed under the RBI’s Prompt Corrective Action Framework in May 2017, though restrictions were lifted in March 2021 after financial performance improved.
Key facts
- Stake sold: 60.72% of IDBI Bank equity
- Purchase price: Rs 52,878.08 crore
- Price per share: Rs 81
- Buyer: 10955230 Canada Inc. (Fairfax Financial Holdings Ltd.)
- Government of India shareholding sold: 30.48%
- LIC shareholding sold: 30.24%
- Government residual stake: 15%
- LIC residual stake: 19%
- Expression of Interest issued: 7 October 2022
- Cabinet approval date: 14 October 2026
- Fair valuation benchmark: Rs 75.99 per share
How the stake sale was structured
The sale process followed a two-stage competitive bidding mechanism overseen by an Inter-Ministerial Group, the Core Group of Secretaries on Disinvestment, and an Alternative Mechanism comprising an empowered group of Cabinet ministers.
Five parties initially expressed interest. Four qualified based on RBI’s “Fit and Proper” assessment and security clearance from the Ministry of Home Affairs. Of these, two submitted technical and financial bids and became Qualified Bidders. After evaluation, Fairfax Financial Holdings was selected as the Strategic Buyer.
Valuation and pricing
Initial bids invited in financial year 2025-26 fell short of the reserve price of Rs 94.42 per share and were rejected. A second round of bidding was conducted in financial year 2026-27, with best offers invited from qualified bidders.
Two independent valuation agencies assessed IDBI Bank’s worth using different methods. The Relative Valuation by Market Multiple Method compared IDBI with other public sector banks as of 31 March 2026. The Asset Valuation Method calculated the net asset value using the bank’s audited accounts. The average fair valuation from both methods was Rs 75.99 per share.
Fairfax Financial’s winning bid of Rs 81 per share exceeded both the benchmark price and valuations by independent agencies, and was therefore approved as reasonable.
Shareholding after the transaction
After the sale, Fairfax Financial will hold 60.72% of IDBI Bank. The Government of India will retain 15% and LIC will retain 19%, together holding 34% of the bank’s equity. The government has delegated powers to the Alternative Mechanism to sell its residual 15% stake through the open market at a future date. LIC will manage its residual shareholding according to internal procedures while complying with regulatory directions.
Regulatory requirements ahead
Before the transaction closes, the successful bidder must present credentials to the RBI for reassessment under the Fit and Proper criteria applicable at the time of acquisition. Fairfax Financial must also submit a roadmap showing how it will comply with all regulatory conditions imposed by the RBI.
What this means for you
IDBI Bank customers will see no immediate change. The bank will continue operating under RBI regulation. The transaction allows the government to reduce its financial burden related to IDBI Bank’s past losses while attracting foreign investment into India’s banking sector. For IDBI Bank depositors, the change in ownership brings a global financial services company with established operations, though regulatory oversight by the RBI will remain strict.
This sale represents a shift in government strategy toward privatisation of troubled state-owned enterprises, using a structured bidding process to secure market-determined prices for public assets.