The Union government has approved the sale of a combined 60.72% stake in IDBI Bank Ltd to Canada-based 10955230 Canada Inc., a parent entity of Fairfax Financial Holdings Ltd, for ₹52,878.08 crore, marking a major milestone in the bank’s privatisation process.
The Cabinet Committee on Economic Affairs (CCEA), at its meeting on October 14, 2026, approved the strategic buyer after evaluating the bids received through a competitive bidding process. The transaction involves the sale of the government’s 30.48% stake and the Life Insurance Corporation of India’s (LIC) 30.24% holding in the bank.
The successful bid of ₹81 per share values the transaction at approximately ₹52,878 crore. The government will retain a 15% stake in IDBI Bank, while LIC will hold 19% after the transaction.
The deal, once completed following regulatory approvals, will mark one of the most significant ownership changes in India’s banking sector and, according to the Finance Ministry, the largest foreign direct investment (FDI) in the country’s financial sector to date.
Fairfax entity emerges as strategic buyer
The government launched the strategic disinvestment process to bring in a strategic investor for IDBI Bank, which had faced financial difficulties and required repeated capital infusions from the government and LIC.
The Reserve Bank of India (RBI) placed the bank under its Prompt Corrective Action framework on May 5, 2017, owing to its non-performing assets and losses. The restrictions were subsequently lifted in March 2021, subject to conditions and continued monitoring, after the bank’s financial position improved.
The Cabinet Committee on Economic Affairs later approved the strategic restructuring of the lender, paving the way for the sale of the combined 60.72% stake held by the government and LIC.
The transaction process began with the issuance of a Preliminary Information Memorandum on October 7, 2022, inviting expressions of interest from prospective buyers.
Five parties initially submitted expressions of interest, of which four qualified under the eligibility criteria. Two eventually submitted technical and financial bids and became qualified bidders.
The successful bidder must now present its credentials to the RBI under the fit-and-proper assessment process and submit a roadmap for complying with the applicable regulatory conditions.
Winning bid exceeds fair value benchmark
The government said the winning bid of ₹81 per share was higher than the benchmark fair value of ₹75.99 per share determined by two independent professional valuation agencies.
The valuation exercise was undertaken after the initial bids failed to meet the reserve price fixed during the earlier round of bidding in the financial year 2025-26.
The reserve price at that stage was ₹94.42 per share. However, the initial bids fell short of this level and were not approved.
The Finance Ministry said the IDBI Bank share price had been influenced by the disinvestment process and subsequently corrected after the initial bids failed to secure approval.
The bank’s share price stood at ₹42.40 on the last trading day before the expression-of-interest process began on October 7, 2022. It had risen to ₹108.12 on the last trading day before the invitation of initial bids on January 8, 2026.
Before the invitation of fresh bids for the bidders’ best offers on May 18, 2026, the stock traded at ₹70.38.
The government said the stock price fluctuated between ₹61.01 and ₹118.38 over the valuation period, making it an unreliable indicator of the bank’s intrinsic value.
Two valuation methods used
Instead of relying on the volatile market price, the government adopted two independent valuation methodologies to determine the fair value of IDBI Bank.
The first was the relative valuation method using market multiples, based on the March 31, 2026 closing accounts of public sector banks. This approach was intended to assess IDBI Bank’s value relative to comparable institutions.
The second was the asset valuation method, which considered tangible and intangible assets, including land and properties, alongside liabilities, based on the bank’s audited accounts as of March 31, 2026.
The average of the valuations arrived at by the two independent agencies was ₹75.99 per share. The winning bid of ₹81 represented a premium of ₹5.01, or about 6.6%, over this benchmark.
The Finance Ministry said the bid was also higher than the fair value estimates of both valuation agencies and was therefore considered reasonable.
Government and LIC to retain minority stakes
The transaction will reduce the government’s direct holding in IDBI Bank to 15%, while LIC’s stake will fall to 19%.
The CCEA has also authorised the Alternative Mechanism, an empowered group of ministers, to undertake the sale of the government’s residual 15% holding through the open market in accordance with the prescribed standard operating procedure.
LIC will independently manage its residual shareholding under its internal procedures, subject to applicable regulatory directions.
The government has not indicated in the announcement when the transaction will be completed. The successful bidder must first satisfy the RBI’s regulatory requirements before the acquisition can proceed to completion.
The sale marks a significant step in the government’s efforts to restructure its ownership of IDBI Bank and bring in a strategic investor, while retaining minority holdings through the Centre and LIC.