The Union Cabinet greenlit the transfer of 60.72 per cent of IDBI Bank to Canada Inc., a subsidiary of Canada-based Fairfax Financial Holdings, for a total consideration of Rs 52,877.07 crore. The stake comprises the government’s 30.48 per cent holding and the Life Insurance Corporation of India’s (LIC) 30.24 per cent. Finance Minister Nirmala Sitharaman framed the deal as a "strategic restructuring" rather than a full exit, noting that both the government and LIC will retain minority stakes.
This deal sets a new benchmark for foreign direct investment in Indian banking. The government confirmed it will be the largest FDI in the financial sector to date, eclipsing the historic Air India sale. Fairfax bid Rs 81 per share to secure control, a move designed to shift management responsibility away from public ownership.
Regulatory hurdles remain. The Reserve Bank of India must now complete its 'fit and proper' assessment of Fairfax before the transfer can finalize. Additionally, Fairfax holds a stake in CSB Bank and must either merge it with IDBI Bank or exit within two years. It is also mandated to make an open offer to IDBI’s minority shareholders.
DIPAM Secretary Arunish Chawla told PTI that the transaction is on track to close before the current fiscal year ends. LIC’s holding in IDBI is expected to dip from 19 per cent to 15 per cent over the next two years, while the government’s residual shares will be liquidated through the open market.