Cabinet approves sale of 60.72% IDBI Bank stake to Fairfax subsidiary

The Union Cabinet on Wednesday approved the sale of a 60.72% stake in IDBI Bank to a subsidiary of Fairfax Financial Holdings for Rs 52,878.08 crore. The stake comprises the government’s 30.48% holding and Life Insurance Corporation of India’s (LIC) 30.24% share.

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Fairfax approved as strategic buyer

The Cabinet Committee on Economic Affairs, chaired by Prime Minister Narendra Modi, approved Fairfax as the strategic buyer for IDBI Bank. The transaction covers the combined stake held by the Government of India and LIC.

Government and LIC holdings after the sale

After the transaction is completed, the government will retain a 15% stake in IDBI Bank, while LIC will retain 19%. Their combined shareholding in the bank will therefore stand at 34%.

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Two-stage competitive bidding process

The buyer was selected through a two-stage competitive bidding process overseen by government bodies. These included the Inter-Ministerial Group, the Core Group of Secretaries on Disinvestment and an empowered group of Cabinet ministers.

Expected impact on banking and finance

The Ministry of Finance said the privatisation is expected to have a significantly positive impact on India’s banking and financial sector. It said the bank would be able to raise funds without relying on government support. The strategic buyer is also expected to bring private capital, new technology and better management practices.

Sale process began in 2022

The sale process was first announced in 2022. It was put on hold in March after bids failed to meet the government’s price expectations. The process subsequently moved forward amid regulatory and procedural delays. Union Minister Ashwini Vaishnaw described the transaction as the largest foreign direct investment in India’s financial sector.