The Union Cabinet has approved Canadian financial services group Fairfax Financial Holdings as the strategic buyer for a 60.72% stake in IDBI Bank for Rs 52,878 crore. The transaction is set to become the largest foreign direct investment (FDI) deal in India’s financial sector, marking a significant step in the government’s long-running effort to privatise the lender.
The approval was granted by the Cabinet Committee on Economic Affairs (CCEA) on October 14, 2026. The transaction remains subject to regulatory requirements and other formalities before completion.
Government and LIC to Sell 60.72% Stake
The proposed transaction involves the sale of a combined 60.72% stake held by the Government of India and the Life Insurance Corporation of India (LIC).
The government will sell its 30.48% holding, while LIC will divest 30.24%. Following the transaction, the government will retain a 15% stake in IDBI Bank, and LIC will continue to hold 19%, leaving them with a combined 34% ownership.
Fairfax’s winning bid values the shares at Rs 81 apiece. This is higher than the benchmark fair valuation of Rs 75.99 per share established by independent valuation agencies.
The government said the winning offer was considered reasonable because it exceeded the benchmark and the estimates provided by both valuation agencies.
Who Is Fairfax Financial Holdings?
Fairfax Financial Holdings is a Canada-based financial services and investment group led by Prem Watsa. The company has investments across insurance, reinsurance and other financial businesses.
The acquisition would expand Fairfax’s presence in India’s financial services market. The group already has investments in Indian businesses, including financial services companies.
The proposed purchase is being made through Fairfax’s subsidiary, 10955230 Canada Inc., which has been approved as the strategic buyer.
IDBI Bank Sale Process Took More Than Four Years
The government’s plan to sell a controlling stake in IDBI Bank has been under consideration for several years. The disinvestment process faced delays as earlier bids did not meet the government’s valuation expectations.
The government subsequently reassessed the bank’s valuation and invited fresh bids. Fairfax’s offer of Rs 81 per share emerged as the successful bid after the revised evaluation process.
The bank’s financial position has also improved significantly compared with the period when it faced severe asset-quality challenges. IDBI Bank was placed under the Reserve Bank of India’s Prompt Corrective Action framework in 2017 before restrictions were later lifted in 2021, subject to conditions and monitoring.
RBI Approval Still Required
The Cabinet’s approval does not mean the transaction has been fully completed. Fairfax must present its credentials to the Reserve Bank of India for the required fit-and-proper assessment and submit a roadmap for complying with regulatory conditions.
The government has indicated that the transaction is expected to be completed before the end of the current financial year, subject to the necessary requirements being met.
The CCEA has also authorised the relevant decision-making mechanism to handle a possible sale of the government’s remaining 15% stake through the open market, following the applicable procedures.
What the Deal Means for India’s Banking Sector
The proposed acquisition represents a major step in India’s financial-sector disinvestment programme. It would transfer management control of IDBI Bank to a private investor while allowing the government and LIC to retain minority stakes.
For Fairfax, the deal offers an opportunity to expand in a large banking market. For the government, it advances the long-running effort to reduce its direct ownership of the lender and attract private capital into the banking sector.
The final impact will depend on regulatory clearance, completion of the transaction and Fairfax’s plans for the bank’s future operations.
Summary
The Union Cabinet has approved Fairfax Financial Holdings’ Rs 52,878 crore bid for a 60.72% stake in IDBI Bank. The government and LIC will sell 30.48% and 30.24%, respectively, while retaining a combined 34% stake after the transaction. Fairfax’s offer of Rs 81 per share exceeded the benchmark valuation of Rs 75.99. RBI assessment and other formalities remain before completion.
