Cabinet approves IDBI Bank stake sale to Fairfax for ₹52,877 crore

The Union Cabinet on Wednesday approved the strategic restructuring of IDBI Bank, with the government set to sell a 60.72% stake in the lender to Fairfax Financial Holdings for ₹52,877 crore.

Prime Minister Narendra Modi-led Cabinet Committee on Economic Affairs (CCEA) approved the Canadian entity as the strategic buyer.

Union Minister Ashwini Vaishnaw said the strategic partnership would facilitate fresh capital infusion into IDBI Bank and create growth opportunities for micro, small and medium enterprises (MSMEs), small industries and new entrepreneurs.

Fairfax will offer 81 rupees ​per share of IDBI Bank, according to a Reuters report.

Govt, LIC to jointly retain 34% stake

The government and Life Insurance Corporation of India (LIC) will jointly retain a 34% stake in the restructured entity, Vaishnaw said.

“The Government of India and LIC will jointly retain a 34% stake in the restructured entity. Retaining this 34% stake will significantly enhance the value of the holdings held by both the Government of India and LIC,” he said.

The deal also involves a regulatory challenge for Fairfax, which already holds around 40% of Kerala-based CSB Bank. Under Reserve Bank of India (RBI) rules, an entity cannot own and operate two separate banks.

Sale dragged due to regulatory and procedural issues

Fairfax may have to sell its stake in CSB Bank or merge the lender with IDBI Bank to address the issue. An earlier Reuters report in August said the Canadian investor could be given up to two years to consolidate its Indian banking holdings. However, a government official cautioned at the time that it was speculative to say such a window would be granted. The transaction remains subject to the necessary regulatory clearances.

The sale of the lender was first announced in ​2022, but ​has dragged ⁠since then due to regulatory and procedural issues. ​It was shelved in March ​as ⁠bids fell short of the government’s sale price expectation.

Biggest disinvestment since Air India by govt

The transaction marks the biggest disinvestment by the Union government since Air India, according to the PTI report. Vaishnaw said the move would also create an opportunity to attract foreign direct investment into India’s financial services sector.

“This move will create new growth opportunities, particularly for MSMEs, small industries, new entrepreneurs, and those entering the services sector or looking to expand, while also serving as a major opportunity to attract FDI into financial services,” he added.

IDBI Bank recorded a net profit of ₹9,513 crore in FY26. Established in 1964 as a development financial institution, it transitioned into a commercial bank in 2004.