IDBI Bank: CCEA Clears Sale of 60.72% Stake to Fairfax Arm

The Cabinet Committee on Economic Affairs (CCEA), meeting on 14 October 2026, cleared the strategic restructuring of IDBI Bank Ltd and named M/s 10955230 Canada Inc as the Strategic Buyer. The buying company's parent is M/s Fairfax Financial Holdings Ltd. Once the deal closes it will be the largest foreign direct investment India's financial sector has seen.

What changes hands

A block of 60.72 per cent of the bank's equity is being sold. Of that, 30.48 per cent comes from the Government of India and 30.24 per cent from the Life Insurance Corporation of India, and the money received is split between the two in the same proportion. Both sellers stay on afterwards as ordinary public shareholders: the Centre keeps 15 per cent and LIC 19 per cent, and each will take its nominees off the bank's board.

How the price was tested

Bidders in such a sale put in sealed offers with no benchmark announced beforehand, so the government had the enterprise valued separately. Two professional agencies worked with two methods: the Market Multiple Method, which compared the bank against the closing accounts of every public sector bank as on 31 March 2026, and the Asset Valuation Method, which weighed tangible and intangible assets including land and property against liabilities in the bank's audited accounts of the same date. Their average, Rs 75.99 per share, became the benchmark. The winning offer of Rs 81 per share cleared both that benchmark and each agency's own estimate, so it was held reasonable.

The share price itself was set aside, because the thinly traded stock swung between Rs 118.38 and Rs 61.01 during the valuation period and kept pulling the valuation away from the bank's intrinsic worth. For the record, the stock stood at Rs 70.38 when best offers were called for on 18 May 2026, against a reserve price of Rs 94.42 fixed for the first round in 2025-26, an unaffected pre-bid price of Rs 42.40 before the offer document went out, and Rs 108.12 on the eve of the first round of bids. Those first bids were rejected for falling below the reserve price.

The road to the decision

• The RBI placed IDBI Bank under its Prompt Corrective Action framework on 5 May 2017 over bad loans and losses, and withdrew the curbs by a letter of 10 March 2021 subject to conditions.
• The offer document inviting expressions of interest went out on 07.10.2022; only parties the RBI found 'Fit and Proper' and the Home Ministry cleared on security could bid.
• Five parties showed interest, four qualified and two finally put in techno-financial bids.
• Decisions were routed through an Inter-Ministerial Group, the Core Group of Secretaries on Disinvestment and an Alternative Mechanism of empowered ministers.

The successful bidder must now place its credentials before the Reserve Bank of India and file a roadmap for meeting regulatory conditions. The CCEA has separately allowed the Alternative Mechanism to sell the Centre's leftover 15 per cent in the open market later.