This is the largest foreign direct investment (FDI) in the country’s financial sector and biggest stake sale by the government. “This process has been brought to its logical conclusion,” said finance minister . “We are calling it strategic restructuring as we are still invested in IDBI Bank.”
Fairfax subsidiary M/s 10955230 Canada Inc will pay ₹81 a share, higher than the average ₹75.99 per share valuation by two independent valuations, the government said.
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ET BureauMove Helps Meet Divestment Target
Fairfax, which currently holds a 40% stake in Kerala-based CSB Bank, will have to either merge it with IDBI Bank or exit the latter within two years of signing the deal under the rules.
The bank’s stock surged 9% to close at Rs 90.44 apiece on Wednesday, although the deal was announced after market hours. The record flow from the IDBI Bank stake sale is expected to help the government meet its Rs 80,000 crore disinvestment target for the current fiscal year.
Fairfax will pick up a 30.48% stake from the government and another 30.24% from the .
After conclusion of the deal, expected in the current financial year, LIC will have 19% in the bank while the government will be left with 15%.
“This will not only strengthen the banking ecosystem but also help banking services surpass global benchmarks,” Sitharaman said. “It reinforces that India’s growth story is strong, its economy is resilient, and the government’s commitment to reform is unwavering.” She was speaking after the CCEA, chaired by Prime Minister Narendra Modi, approved the stake sale on Wednesday.
The deal marks a significant milestone in the government’s efforts to lower state ownership in commercial enterprises in non-strategic sectors.
The CCEA has also authorised the so-called alternative mechanism, an empowered group of cabinet ministers, to offload IDBI shares – from the remaining 15% stake that the government will hold after the divestment – through the open market.
The deal will need to be approved by RBI, which will conduct a “fit and proper” assessment, as well as the Competition Commission of India and other statutory authorities.
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ET BureauFairfax will be required to present its credentials to the central bank and submit a roadmap for meeting the regulator’s requirements before the sale can be finalised. As per RBI norms, promoters can hold no more than 26% in a bank. Fairfax will get up to 15 years to comply with this condition, Department of Investment and Public Asset Management secretary Arunish Chawla said, adding that there will be a lock-in period of five years for the promoter.
The new promoter will also have to retain the name, brand and customer relations for at least three years, he said. Employees don’t have to worry, Chawla said, adding that the management transfer had been discussed with all stakeholders.
LIC will have to cut its stake to 15% from 19% in IDBI Bank in two years.
After completing the transaction, likely before the end of FY27, the government will exit from the IDBI Bank board.
The ministry said RBI’s regulatory supervision, deposit insurance and priority-sector lending requirements will remain unchanged. Deposits will continue to be insured up to Rs 5 lakh per depositor under the Deposit Insurance and Credit Guarantee Corporation framework.
IDBI Bank will also continue to provide services to government welfare schemes. These include the Pradhan Mantri Jan-Dhan Yojana, Pradhan Mantri Jeevan Jyoti Bima Yojana, Pradhan Mantri Suraksha Bima Yojana, the Atal Pension Yojana, PM Mudra Yojana loans for micro and small enterprises, and GeM Sahay, collateral-free, digital working capital loans based on government e-marketplace transaction records.
The finance ministry said five contenders had initially submitted expressions of interest for IDBI, with four of them qualifying. Two were picked as qualified bidders, the ministry said.
Bids were initially invited last fiscal FY26, when the reserve price was fixed at Rs 94.42 per share. Offers fell short of the reserve price and were not accepted.
Qualified bidders were asked to submit their best offers in the current fiscal year. These revised offers were considered by the cabinet committee.
According to the statement, IDBI Bank’s financial position has improved since it was placed under RBI’s Prompt Corrective Action framework in May 2017. The restrictions were lifted in March 2021 following the improvement. Gross non-performing assets declined from 31.78% in September 2018 to 2.32% in March 2026, while net non-performing assets fell from 17.30% to 0.15%.
Its capital adequacy ratio rose from 6.22% in 2018 to 26.65% in March this year. The bank reported a net profit of Rs 9,513 crore in FY26, while total business crossed Rs 6.27 lakh crore as of September 30, up 18% year-on-year.
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