IDBI Bank sale to Fairfax for Rs 52,878 crore cleared by Cabinet in historic FDI deal

The Union Cabinet has approved the sale of a 60.72% stake in IDBI Bank to Fairfax Financial Holdings for Rs 52,878 crore, clearing the largest foreign direct investment in India's financial sector to date.

The decision, taken by the Cabinet Committee on Economic Affairs chaired by Prime Minister Narendra Modi, concludes a strategic divestment process initiated in 2022. Under the approved terms, Fairfax subsidiary M/s 10955230 Canada Inc. will acquire the majority stake at Rs 81 per share, taking over management control of the lender.

The transaction covers a 30.48% holding held by the central government and 30.24% owned by the Life Insurance Corporation of India. Following the sale, the government will retain a 15% stake and LIC will hold 19%, leaving the state and state-backed insurer with a combined 34% interest.

Fairfax will also launch an open offer to IDBI Bank's minority shareholders, in line with regulatory rules. The Department of Investment and Public Asset Management expects the transaction to conclude before the end of the current financial year.

How the bidding played out

The strategic sale followed a two-stage competitive auction managed by the Inter-Ministerial Group and the Core Group of Secretaries on Disinvestment. Prospective buyers had to pass fit-and-proper scrutiny by the Reserve Bank of India and obtain security clearance from the Ministry of Home Affairs.

An earlier bidding round in the 2025–26 financial year fell short of the reserve price of Rs 94.42 per share. The government subsequently called for fresh sealed bids. Two independent valuation agencies assessed the bank, returning an average fair valuation benchmark of Rs 75.99 per share. Fairfax's bid of Rs 81 per share came in above that benchmark and both agency estimates, securing CCEA approval.

Fairfax, which also owns an interest in CSB Bank, must either merge CSB with IDBI Bank or sell down its CSB holding within two years to satisfy central bank cross-holding norms.

A decade of balance sheet clean-up

The sale caps a turnaround for a lender that once sat near the centre of India's non-performing loan crisis. The government injected roughly Rs 25,000 crore into IDBI Bank between 2010 and 2020. The central bank placed it under prompt corrective action curbs in May 2017, lifting them in March 2021 after bad loans subsided and capital ratios recovered.

IDBI Bank's total business reached Rs 6,27,149 crore as of September 30, 2026, an 18% increase year-on-year. For the central government, the successful transaction validates its sustained push to rehabilitate distressed balance sheets and attract long-term global capital into the core economy.