Canada-based Fairfax Financial Holdings will acquire a 60.72% stake in IDBI Bank for Rs 52,878 crore ($5.47 billion), following an approval from the Cabinet Committee on Economic Affairs (CCEA), chaired by Prime Minister Narendra Modi.
The transaction is expected to mark the largest foreign direct investment (FDI) inflow into India to date. The Life Insurance Corporation of India (LIC) is currently the largest shareholder in IDBI Bank, which the Reserve Bank of India (RBI) has classified as a private sector bank since January 2019.
Under the proposed transaction, Fairfax Financial Holdings, headquartered in Toronto, will acquire 30.48% of the bank's equity from the Government of India and 30.24% from LIC. The company is led by India-origin billionaire Prem Watsa, who was born near Hyderabad in 1950.
Following the transaction, the government's stake in IDBI Bank will decline to 15%, while LIC's holding will fall to 19%. Together, the two entities will retain a 34% stake in the bank.
"The government and LIC still remain invested," said Finance Minister Nirmala Sitharaman, adding that the deal is a strategic restructuring of IDBI Bank.
The deal values IDBI Bank at Rs 81 per share, approximately 11% below its closing price of Rs 90.40 on Wednesday. Over the past year, the bank's share price has ranged between Rs 61 and Rs 118 on the BSE.
However, a senior Finance Ministry official clarified that the transaction price was not determined by the stock market price. Instead, the valuation was based on the bank's tangible and intangible assets, including land and property, along with its liabilities, using the audited accounts as of March 31, 2026.
According to a statement from the Ministry of Finance, two independent professional valuation agencies assessed the bank using separate methodologies. The average fair valuation stood at Rs 75.99 per share, which was used as the benchmark for evaluating qualified bids.
The ministry said Fairfax's winning bid of Rs 81 per share exceeded the benchmark price as well as the fair-value estimates provided by both valuation agencies. The offer was therefore considered reasonable and approved.
Arunish Chawla, Secretary of the Department of Investment and Public Asset Management (DIPAM), said the transaction is expected to be completed by the end of the current financial year.
IDBI was established as a development financial institution in 1964 and converted into a commercial bank in 2004. It has faced financial stress forcing the government to infuse around Rs 25,000 crore between 2010 and 2020.
However, the bank’s financial health has improved in recent years. It reported a net profit of Rs 9,513 crore in 2025-26. IDBI Bank’s total business stood at Rs 6,27,149 crore as of September 30, 2026, an increase of 18% over a year earlier.
