Our Bureau
New Delhi
The Union Cabinet has approved the sale of a 60.72% stake in IDBI Bank to Canada-based Fairfax Financial Holdings’ subsidiary, Canada Inc., for ₹52,878 crore, paving the way for a major ownership restructuring of the lender. The transaction, once completed, is expected to become the largest foreign direct investment (FDI) in India’s financial sector.
The Cabinet Committee on Economic Affairs (CCEA), chaired by Prime Minister Narendra Modi, cleared the proposal on Wednesday. The transaction involves the sale of the Centre’s 30.48% stake and the Life Insurance Corporation of India’s (LIC) 30.24% holding in the bank.
Following the transaction, the government will retain a 15% stake in IDBI Bank, while LIC will hold 19%, taking their combined shareholding to 34%. Fairfax’s successful bid was valued at ₹81 per share.
The buyer will now be required to present its credentials to the Reserve Bank of India (RBI) for the prescribed ‘fit-and-proper’ assessment and submit a roadmap for complying with regulatory conditions before the deal is completed. The transaction also requires the necessary regulatory clearances.
IDBI Bank had faced significant financial stress in the past, leading the RBI to place it under the Prompt Corrective Action framework in 2017. The restrictions were lifted in 2021 after an improvement in its financial position, subject to continued monitoring.
The proposed transaction marks a significant step in the government’s broader efforts to restructure public-sector-linked financial institutions and attract foreign investment into India’s banking sector.