India Approves Sale of a 60.72% IDBI Bank Stake to Fairfax for Rs 52,878 Crore

India has approved the sale of a majority stake in IDBI Bank to a Fairfax Financial Holdings unit, in what the government says will be the country's largest foreign direct investment in the financial sector once it is completed.

The Cabinet Committee on Economic Affairs (CCEA), in its meeting on Wednesday, October 14, 2026, approved M/s 10955230 Canada Inc., whose parent entity is Fairfax Financial Holdings Ltd., as the strategic buyer for IDBI Bank Ltd., for a purchase consideration of Rs 52,878.0806181 crore, about $5.5 billion. The buyer will acquire a combined 60.72% stake in IDBI Bank: 30.48% held by the Government of India and 30.24% held by the Life Insurance Corporation of India (LIC), at a winning bid of Rs 81 per share.

The bid cleared the benchmark the valuers set

The Rs 81-a-share bid was judged against a benchmark of Rs 75.99 per share, the average of fair valuations carried out by two independent professional agencies using two different methods: relative valuation by the market multiple method, based on the March 31, 2026 closing accounts of all public sector banks, and the asset valuation method, based on IDBI Bank's audited March 31, 2026 accounts. The government said the winning bid was above the benchmark and above both agencies' fair value estimates, and was therefore adjudged reasonable and approved. The market's own verdict was cooler: IDBI Bank shares had surged 9% on Wednesday before the announcement, adding Rs 8,086 crore to the bank's market valuation, then fell 7.54% to Rs 83.62 on the BSE on Thursday, with the NSE move at 7.48% to the same Rs 83.62 level — the approved Rs 81 bid sits below where the stock changed hands after the news.

A sale that failed once at a higher reserve

This was the process's second attempt at price discovery. Initial bids were invited in the 2025-26 financial year against a reserve price of Rs 94.42 per share; those initial bids fell short of the reserve price and were not approved. Best-offer bids were then invited in 2026-27, and the government said the narrowly traded stock's volatile market price — a high-low range of Rs 118.38 to Rs 61.01 over the valuation period — was disregarded in favor of the two valuation methods. The process itself ran as a two-stage competitive bidding exercise overseen by an Inter-Ministerial Group, the Core Group of Secretaries on Disinvestment and an Alternative Mechanism of empowered cabinet ministers. Five parties submitted expressions of interest after the process opened on October 7, 2022; four qualified, and two submitted final techno-financial bids.

What the government and LIC keep, and what they give up

After the sale, the Government of India will retain a 15% residual stake and LIC will retain 19%, a combined 34%. Both will withdraw their board nominees and become public shareholders, and Hindu BusinessLine reported, citing the government's statement, that neither will hold a board seat or carry any contingent liability. The PTI report put the expected proceeds at about Rs 26,620 crore for the government's stake and about Rs 26,440 crore for LIC's stake. The CCEA delegated power to the Alternative Mechanism to sell the government's residual 15% through the open market later, while LIC will be free to manage its 19% under its own internal procedures. Hindu BusinessLine reported the deal is expected to be completed by the end of the fiscal year; that timing is a reported expectation, not a completed step.

Approval is not closing: the RBI still has its say

The successful bidder must now present its credentials to the Reserve Bank of India in line with the fit-and-proper assessment conducted at the expression-of-interest stage, and submit a roadmap for complying with the regulatory conditions set there; the PTI report added that Reserve Bank and other statutory clearances are still needed, and Reuters Breakingviews noted that no binding agreements have been signed. The bank being sold carries a long rescue history: after repeated capital infusions, first from the government and later from LIC, the RBI placed IDBI Bank under its Prompt Corrective Action framework on May 5, 2017, over its non-performing assets and losses, and lifted the restrictions on March 10, 2021, subject to conditions and continuous monitoring. The government said that once completed, the transaction will be the largest FDI in India's financial sector so far — the final test is whether the clearances land and the reported fiscal-year-end completion holds.