Fairfax wins Cabinet approval for ₹52,878 crore IDBI stake

India’s Cabinet Committee on Economic Affairs approved Fairfax Financial Holdings’ purchase of 60.72% of IDBI Bank for ₹52,878 crore on Wednesday, The Economic Times said in an Oct. 15, 2026, newspaper report.

The newspaper said the $5.5 billion transaction would be India’s largest foreign direct investment in financial services and support an ₹80,000 crore divestment target for the current fiscal year.

Fairfax subsidiary 10955230 Canada Inc. will pay ₹81 a share, above the ₹75.99 average valuation from two independent assessments, the government said.

“This process has been brought to its logical conclusion,” Finance Minister Nirmala Sitharaman said. “We are calling it strategic restructuring as we are still invested in IDBI Bank.”

The sale would end a four-year divestment process for IDBI Bank, which is state-backed but classified by the Reserve Bank of India as a private-sector bank. Fairfax will buy 30.48% from the government and 30.24% from Life Insurance Corp. of India.

After completion, expected in the current financial year, LIC would hold 19% of IDBI Bank and the government would hold 15%. The government would leave the bank’s board after the transaction is completed, likely before the end of FY27.

The deal still needs approvals from the Reserve Bank of India, the Competition Commission of India and other statutory authorities. The central bank will conduct a fit-and-proper review, a regulatory assessment of whether the buyer is suitable to own a bank.

Fairfax already owns 40% of CSB Bank, based in Kerala. Under the rules described in the report, Fairfax must either merge CSB Bank with IDBI Bank or exit one of the holdings within two years of signing the deal.

RBI rules cap promoter ownership in a bank at 26%. Department of Investment and Public Asset Management Secretary Arunish Chawla said Fairfax would have as long as 15 years to meet that limit and would face a five-year lock-in period.

Chawla also said the new promoter must retain IDBI Bank’s name, brand and customer relationships for at least three years. LIC must cut its IDBI Bank stake to 15% from 19% within two years.

The finance ministry said regulatory supervision, deposit insurance and priority-sector lending requirements would not change. Deposits will continue to be insured up to ₹5 lakh per depositor under the Deposit Insurance and Credit Guarantee Corporation framework.

IDBI Bank’s balance sheet has strengthened since the RBI placed it under the Prompt Corrective Action framework in May 2017, a regime used to restrict weaker banks. Those restrictions were lifted in March 2021.

Gross non-performing assets fell to 2.32% in March 2026 from 31.78% in September 2018, while net non-performing assets dropped to 0.15% from 17.30%. Capital adequacy rose to 26.65% in March 2026 from 6.22% in 2018.

IDBI Bank reported net profit of ₹9,513 crore in FY26. Total business crossed ₹6.27 lakh crore as of Sept. 30, up 18% from a year earlier.

The bank’s shares rose 9% to ₹90.44 in Mumbai trading on Wednesday. The deal was announced after market hours.

Before the end of FY27, the observable step is completion of the stake transfer and the government’s exit from the IDBI Bank board. The transaction cannot close without RBI, Competition Commission of India and other statutory approvals.

Within two years of signing the deal, Fairfax must either combine CSB Bank with IDBI Bank or exit one of the holdings. LIC must also reduce its IDBI Bank stake to 15% from 19% within two years.

For five years after completion, Fairfax faces a promoter lock-in period. Over as long as 15 years, the buyer must bring its promoter ownership in the bank down to the RBI’s 26% cap.

Source: newspaper report, The Economic Times, Oct. 15, 2026