The Cabinet Committee on Economic Affairs (CCEA), chaired by Prime Minister Narendra Modi, has approved the sale of a 60.72 per cent stake in IDBI Bank to Canada-based Fairfax Financial Holdings Ltd for Rs 52,878 crore. The transaction, once completed, will be the largest foreign direct investment (FDI) in India’s financial sector.
The government will sell 30.48 per cent of its stake, while Life Insurance Corporation of India (LIC) will divest 30.24 per cent of its shareholding. This will leave the government with a residual stake of 15 per cent and LIC with 19 per cent.
The CCEA has also delegated powers to the Alternative Mechanism, an empowered group of ministers headed by Finance Minister Nirmala Sitharaman, to sell the government’s residual 15 per cent stake through the open market in accordance with the standard operating procedure. LIC will be free to manage its residual shareholding in line with its internal procedures and regulatory requirements, the finance ministry said.
Of the five parties that initially submitted expressions of interest, four qualified under the prescribed eligibility criteria and disqualification conditions. Two of them subsequently submitted techno-financial bids and became qualified bidders. The ministry did not disclose the names of the other bidders.
The finance ministry said there was no predetermined benchmark for bidding in such transactions. Bidders independently value the enterprise and submit confidential bids in sealed envelopes. Independent agencies are engaged to value the enterprise, with their assessments used to judge the reasonableness of the bids.
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The initial bids, invited in FY26, fell short of the reserve price of Rs 94.42 per share and were rejected. The bank’s share price was Rs 108.12 on January 7, 2026, the last trading day before the invitation of initial bids on January 8. The government subsequently invited fresh bids in FY27, when the stock was trading at Rs 70.38 per share on May 18, 2026, the last trading day before the invitation of best offers.
Given the stock’s volatility, the government relied on two independent valuation methods: market multiples of public sector banks and asset valuation. The average valuation was Rs 75.99 per share. The winning bid of Rs 81 per share was higher than this benchmark and the fair-value estimates of both valuation agencies, and was therefore considered reasonable, the finance ministry said.
The successful bidder will have to present its credentials to the Reserve Bank of India (RBI) in accordance with the fit-and-proper assessment conducted at the expression-of-interest stage. It will also have to submit a roadmap for complying with the prescribed regulatory conditions before the transaction is completed.