Government, LIC to Sell 60.72% Stake in IDBI Bank to Fairfax for Rs 52,878 Crore

The Union Cabinet on Wednesday approved the sale of a 60.72% stake in IDBI Bank to Canada-based Fairfax Financial Holdings for Rs 52,878 crore. Backed by Indian-Canadian billionaire Prem Watsa, the deal is expected to be completed by March 2027 and will mark the largest-ever foreign direct investment (FDI) in India’s financial sector.

Finance Minister Nirmala Sitharaman described the transaction as a “strategic restructuring” rather than a disinvestment, noting that the government would continue to hold a stake in the bank.

The proposed transaction involves the Centre and the Life Insurance Corporation of India (LIC), which together hold a majority stake in the lender. Before the sale, LIC owned 49.24% of IDBI Bank, while the government held 45.48%. Their combined shareholding stood at approximately 94.71%.

Following the transaction, LIC’s stake is expected to decline to around 19%, while the government’s holding will fall to approximately 15%. Fairfax will become the bank’s new promoter after the acquisition is completed.

IDBI Bank, which operated as a public sector bank for several years, underwent a change in ownership in January 2019 when LIC became its promoter following the lender’s prolonged financial difficulties. The proposed sale marks another significant change in the bank’s ownership structure.

According to the terms of the agreement, Fairfax will be required to retain the IDBI Bank name for three years after the transaction is completed. The share purchase agreement will remain valid for three years from the completion of the deal.

The restructuring is expected to bring a new promoter into the bank while allowing the government and LIC to retain minority stakes. The transaction represents a major development in India’s banking sector and reflects the government’s efforts to restructure its holding in the lender while attracting foreign investment.