Canada-based Fairfax Financial Holdings will buy a 60.72 percent controlling stake in IDBI Bank for about Rs 53,000 crore, or Rs 52,878.08 crore, at Rs 81 a share, after the Cabinet Committee on Economic Affairs approved the deal, according to Millennium Post and Kotak Neo. The government will sell 30.48 percent and the Life Insurance Corporation of India (LIC) 30.24 percent. The price is above the fair value of Rs 75.99 a share set by two independent valuers. The sale needs approval from the Reserve Bank of India, the Competition Commission of India and other authorities, and is expected to be completed before the end of 2026-27, with the target given as March 2027.
The case that the deal is a good outcome for the government and the bank rests on the price, the buyer and the conditions. Rs 81 a share is about 6.6 percent above the fair value of Rs 75.99, and the deal is described as the largest foreign investment in an Indian bank. Finance Minister Nirmala Sitharaman said: “Having supported the bank’s recovery, we are now enabling its next phase of growth through the infusion of Foreign Direct Investment while retaining a minority stake.” The conditions protect continuity: Fairfax must keep the IDBI Bank name for at least three years and is subject to a five-year promoter lock-in. The government and LIC will together raise roughly Rs 53,000 crore, with Rs 26,620 crore for the government and Rs 26,440 crore for LIC, according to Millennium Post, and IDBI’s shares rose more than 8 percent on the day.
The case for caution is that the deal is not complete and the history shows how hard it has been. The sale process began in 2022, and the first bids from Fairfax and Emirates NBD in February 2026 fell below the government’s reserve price, so the deal took years and a revised offer, Millennium Post reported. Approvals from the Reserve Bank of India and the Competition Commission of India are still needed, and a share purchase agreement has to be signed. Fairfax has a 15-year timeline to bring its stake below the regulatory 26 percent cap for private bank promoters, and LIC must cut its holding from 19 percent to 15 percent within two years. IDBI’s share price closed about 11 percent above the Rs 81 offer, at Rs 89.85 on one count, which suggests the market expects something beyond the price paid.
The sale matters for Indian banking because it is a major step in the privatisation of a state-controlled lender and brings foreign capital into a bank that has depended on government and LIC support. Before the deal the government held 45.48 percent and LIC 49.24 percent, together 94.71 percent, according to Kotak Neo, so the sale ends a long period of state ownership. For depositors and employees, the conditions on the bank’s name and brand give some continuity, while for the government it brings in cash and reduces its role in running a bank.
Fairfax has agreed a price above the independent valuation, but approvals and a signed agreement are still to come. The deal’s completion by March 2027 will show whether the government has found a lasting way to exit IDBI.
Image: An IDBI Bank branch (file photo). Photo by Arunvrparavur, licensed under CC BY-SA 3.0, via Wikimedia Commons.
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