The Cabinet Committee on Economic Affairs (CCEA) on Wednesday approved Canada-based Fairfax Financial Holdings Ltd. as the strategic buyer for a 60.72% stake in IDBI Bank for approximately ₹52,878.08 crore.
The transaction comprises the sale of a 30.48% stake held by the Government of India and a 30.24% stake held by Life Insurance Corporation of India. Following the sale, the government will retain 15% and LIC 19% in the bank.
The winning offer of ₹81 per share exceeded the benchmark valuation of ₹75.99 per share and the individual fair-value estimates of both independent valuation agencies, the government said.
The successful bidder will be required to present its credentials to the Reserve Bank of India in accordance with the fit-and-proper assessment conducted at the expression-of-interest stage and submit a roadmap for complying with the regulatory conditions.
Once completed, the transaction will be the largest foreign direct investment in India’s financial sector to date.
The sale followed a two-stage competitive bidding process overseen by an Inter-Ministerial Group, the Core Group of Secretaries on Disinvestment and an Alternative Mechanism comprising an empowered group of Cabinet ministers.
The Finance Ministry invited expressions of interest on October 7, 2022. Five parties initially applied, of which four met the prescribed eligibility requirements. Two ultimately submitted technical and financial bids and became qualified bidders.
Participation in the bidding stage required an RBI fit-and-proper assessment and security clearance from the Ministry of Home Affairs.
Initial bids were invited in FY 2025–26, when a reserve price of ₹94.42 per share was set. The bids fell short of that price and were not approved.
The Finance Ministry said the reserve price had been influenced by the bank’s market price following the disinvestment announcement. IDBI Bank shares stood at ₹42.40 on the last trading day before the expression-of-interest announcement and ₹108.12 before initial bids were invited on January 8, 2026.
After the initial bids failed, the share price declined below the discovered bid price of ₹75, the release said.
Qualified bidders were subsequently invited to submit their best offers through sealed bids in FY 2026–27. The stock stood at ₹70.38 on the last trading day before those offers were invited on May 18.
During the valuation period, the share price fluctuated between ₹61.01 and ₹118.38. The government said it disregarded the market price because volatility in the narrowly traded stock could misalign valuation with the bank’s intrinsic value.
Two professional agencies instead used independent methodologies. Relative valuation through the market-multiple method drew on the March 31, 2026 closing accounts of public sector banks. Asset valuation assessed IDBI Bank’s tangible and intangible assets, including land and properties, alongside liabilities, using its audited accounts for the same date.
The average valuation of ₹75.99 per share became the benchmark against which the final offers were assessed.
The restructuring follows a period in which IDBI Bank required repeated capital infusions, initially from the government and later from LIC.
The RBI placed the bank under its Prompt Corrective Action framework on May 5, 2017, imposing restrictions because of non-performing assets and losses. Following improvements in its financial health, the RBI lifted the restrictions on March 10, 2021, subject to conditions and continued monitoring.
The CCEA also authorised the Alternative Mechanism to undertake minority stake sales from the government’s residual 15% holding through the open market under standard procedures.
LIC will be free to manage its remaining stake according to its internal procedures and applicable regulatory directions.
