Fairfax Financial Acquires Controlling Stake in IDBI Bank
Fairfax Financial Holdings is acquiring a 60.72% stake in IDBI Bank for ₹52,878 crore, marking the largest foreign direct investment in India's financial sector.
The Union Cabinet of India approved the sale of a 60.72% controlling stake in IDBI Bank to Canada-based Fairfax Financial Holdings for approximately ₹52,878 crore. The transaction involves the Government of India divesting 30.48% and the Life Insurance Corporation of India (LIC) divesting 30.24%. The winning bid of ₹81 per share exceeded the independent valuation benchmark of ₹75.99. Following the deal, the government will retain a 15% stake and LIC will hold 19%, though LIC may further reduce its holding to 15% to increase public float.
Fairfax Financial plans to use IDBI Bank as a hub for a diversified financial services group, consolidating its holdings in Go Digit insurance and IIFL Capital Services. To comply with Reserve Bank of India rules prohibiting the ownership of two separate banks, Fairfax must either merge its existing stake in CSB Bank with IDBI Bank or divest from CSB Bank within two years.
Government officials, including DIPAM Secretary Arunish Chawla, have assured that employee service conditions and pension benefits are fully protected via a dedicated fund. However, the United Forum of Bank Unions has opposed the move, organizing protests against the privatization and foreignization of the lender. The deal provides critical fiscal relief to the Indian government amid high crude oil prices and a sliding rupee, pushing FY27 disinvestment proceeds past the ₹80,000 crore budget target. The transaction is expected to close by March 2027, pending regulatory clearances.
