The Union Cabinet has approved the sale of a 60.72% stake in IDBI Bank to Canada-based Fairfax Financial Holdings for ₹52,878 crore, in what is expected to be the largest foreign direct investment in India’s financial sector. The decision, taken on October 14, 2026, is a major step towards privatizing the lender, though the deal is not yet complete.
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IDBI Bank Stake Sale: Key Deal Details
| Particular | Detail |
| Buyer | 10955230 Canada Inc., a subsidiary of Fairfax Financial Holdings |
| Stake sold | 60.72% |
| Deal value | ₹52,878.08 crore |
| Offer price | ₹81 per share |
| Implied valuation | about ₹87,100 crore |
| Expected completion | March 2027 |
Government and LIC Ownership After the Deal
The sale covers the government’s 30.48% holding and LIC’s 30.24% stake. Before the transaction, LIC held 49.24% and the Centre 45.48%. Afterwards:
- The government will retain 15% and LIC 19%, a combined 34%.
- LIC must cut its stake to 15% within two years to meet RBI norms.
- The government has also authorised the sale of its remaining 15% through the open market.
Finance Minister Nirmala Sitharaman called it a restructuring rather than a disinvestment, since the government stays invested.
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Conditions Fairfax Must Meet
- Name retention: Fairfax must keep the IDBI Bank name for three years after completion.
- Stake reduction: It must bring its holding down to 26% over 15 years, on a timeline agreed with the RBI.
- CSB Bank: Fairfax holds 40% of CSB Bank. RBI norms do not allow one promoter to run two banks, so it must merge CSB into IDBI or exit within two years.
- Regulatory clearance: The buyer must present its credentials to the RBI under the fit-and-proper assessment.
- Open offer: Fairfax must also make an open offer to minority shareholders.
IDBI Bank Share Price Reaction
Markets moved sharply on both sides of the announcement. IDBI Bank shares gained about 9% on Wednesday to close at ₹90.39 on the NSE, though some reports cite a smaller gain. On Thursday, the stock fell as much as 7.45% to ₹83.70 on the BSE, leaving it roughly 19% lower for the year. LIC shares rose about 2% in early trade.
Why This Privatization Matters
The approval closes a process that stretched over five years. LIC took a controlling stake in January 2019, and the Cabinet first cleared a strategic sale in May 2021. Expressions of interest were invited in October 2022, and only two bidders finally submitted bids. The proceeds will count towards the Centre’s 2026-27 disinvestment target.
The bank’s finances look healthier than when it needed rescue capital. Net profit was ₹2,115 crore in Q1 FY27, up about 5% from ₹2,007 crore a year earlier.
What Happens Next
Cabinet approval is not the final step. The deal still needs regulatory and statutory approvals, including the RBI’s view on Fairfax. DIPAM Secretary Arunish Chawla said the strategic buyer would be subject to a five-year lock-in on its invested capital. The Cabinet has approved the sale of a 60.72% stake in IDBI Bank to Fairfax Financial Holdings, but the transaction is still awaiting regulatory clearance and completion of the required formalities. Until the deal closes, the bank remains under its existing ownership.
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