The sale process for IDBI Bank was first announced in 2022 but faced delays due to regulatory and procedural hurdles.

Canada's Fairfax to buy 60% stake in IDBI Bank as govt okays Rs 52,878-crore sale

After the transaction, the government will retain a 15% stake in the bank, while LIC will hold 19%. Their combined shareholding will stand at 34%.

by · India Today

In Short

  • Union Cabinet approves sale of 60.72% stake in IDBI Bank to Fairfax
  • Government to retain 15% stake, LIC to hold 19% post-sale
  • Sale process began in 2022, faced delays and bid rejections before approval

The Union Cabinet on Wednesday approved the sale of a 60.72% stake in IDBI Bank to a subsidiary of Canadian financial services company Fairfax Financial Holdings for Rs 52,878.08 crore.

The Cabinet Committee on Economic Affairs (CCEA), chaired by Prime Minister Narendra Modi, approved Fairfax as the strategic buyer for the bank. The deal involves the sale of the government's 30.48% stake and Life Insurance Corporation of India's (LIC) 30.24% holding in IDBI Bank.

After the transaction, the government will retain a 15% stake in the bank, while LIC will hold 19%. Their combined shareholding will stand at 34%.

Union Minister Ashwini Vaishnaw said the transaction, once completed, would be the largest foreign direct investment (FDI) in India's financial sector.

The sale followed a two-stage competitive bidding process overseen by several government bodies, including the Inter-Ministerial Group, the Core Group of Secretaries on Disinvestment and an empowered group of Cabinet ministers.

The sale process for IDBI Bank was first announced in 2022 but faced delays due to regulatory and procedural hurdles. It was put on hold in March after bids failed to meet the government's price expectations.

Meanwhile, the Ministry of Finance said that the privatisation of IDBI Bank is expected to have a significantly positive impact on India's banking and financial sector. It added that the bank would be able to raise funds without relying on government support, while the strategic buyer is expected to bring in private capital, new technology and better management practices to strengthen its business and improve its ability to grow both loans and deposits.

- Ends