New Delhi, Finance Minister Nirmala Sitharaman on Wednesday said the Cabinet Committee on Economic Affairs' (CCEA) approval for the strategic restructuring of IDBI Bank will pave the way for attracting foreign direct investment (FDI), while the government retains a minority stake in the lender.
In a post on X, Sitharaman said the government had supported the bank's recovery and was now enabling its next phase of growth through the proposed restructuring.
"Propelled by Hon'ble Prime Minister Shri @narendramodi's visionary leadership, India's reform trajectory reaches another milestone today with the CCEA's approval of IDBI Bank's strategic restructuring," she said.
The move will strengthen India's banking ecosystem and help banking services meet global benchmarks, she said.
Sitharaman said the decision reflects the resilience of the Indian economy and the government's continued commitment to reforms.
The strategic restructuring is part of efforts to build a future-ready financial sector that empowers customers, supports entrepreneurs and contributes to the vision of Viksit Bharat, she added.
Earlier in the day, the Union Cabinet headed by Prime Minister Narendra Modi approved the sale of a 60.72 per cent stake in IDBI Bank to Fairfax Financial Holdings for Rs 52,878 crore, in the country's biggest strategic disinvestment since the sale of Air India and potentially opening a new chapter in the privatisation of state-controlled banks.
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The decision by the Cabinet Committee on Economic Affairs (CCEA) brings to a close a process that has stretched over five years, marking a significant step in the government's efforts to reduce its ownership of state-run assets and attract private capital into the financial sector.
"Once completed, this will be the largest FDI in the financial sector of our economy so far," the government said in a statement.
The government and LIC will together hold a 34 per cent stake in the restructured entity.
The proposed sale of a combined 60.72 per cent stake held by the government and Life Insurance Corporation of India (LIC) would transfer control of the lender to Fairfax, subject to the completion of the transaction and requisite regulatory approvals.