The proposed sale of a combined 60.72% stake held by the government and Life Insurance Corporation of India (LIC) would transfer control of the lender to Fairfax. File.
| Photo Credit: Reuters
The Union Cabinet on Wednesday (October 14, 2026) approved the ‘strategic restructuring’ of IDBI Bank, with Fairfax set to acquire a stake in the lender for ₹52,878 crore, the government announced. With this, the government’s stake in the bank will fall to 15% and Life Insurance Corporation’s (LIC) stake will come down to 19%.
In its release, the government termed the deal as a strategic restructuring rather than strategic disinvestment, adding that it would be the largest foreign direct investment in the financial sector in India’s history. The government currently holds 45.5% of IDBI Bank, while LIC holds 49.2%.
IDBI Bank, having suffered from poor financial health for years, had been put under a Prompt Corrective Action (PCA) framework in 2017. In January 2019, LIC took over controlling stake in the bank by infusing ₹21,624 crore into it and being allotted preferential shares in return.
As a result, the government’s stake in the bank fell below 51% and the Reserve Bank of India classified it as a private bank since then.
“It was against this backdrop that the Cabinet Committee on Economic Affairs (CCEA) approved strategic restructuring of the IDBI Bank Ltd., and in compliance thereof, it was decided that an aggregate 60.72% of the equity stake in the IDBI Bank Ltd be sold to a strategic buyer, of which, the GoI share would be 30.48% and the LIC share would be 30.24%, leaving a residual shareholding of 15% with the GoI and 19% with the LIC,” the government said in its release.
It further said that the winning bidder, out of two parties that finally qualified for bidding, was Canada-headquartered Fairfax Financial Holdings with a winning bid fixed at ₹81 per share.
According to sources in the Ministry of Finance, this strategic restructuring does not change anything for the regulation of the banks or its customer-facing duties.
“The RBI continues full regulatory and prudential supervision of the bank,” the official said on the condition of anonymity as they are not authorised to speak officially to the media. “No depositor or borrower is affected by this strategic restructuring.”
“Deposits remain insured up to ₹5 lakh per depositor under the Deposit Insurance and Credit Guarantee Corporation,” they added. “The mandatory 40% Priority Sector Lending target applies to all private commercial banks.”
They further said that IDBI will continue to provide financial inclusion, social security and pension schemes such as the Pradhan Mantri Jan Dhan Yojana, Pradhan Mantri Jeevan Jyoti Bima Yojana, Pradhan Mantri Suraksha Bima Yojana, and the Atal Pension Yojana (APY).
The bank has seen a significant turnaround in its financial health since it became a private bank. Its gross non-performing asset ratio fell from 31.8% in September 2018 to 2.3% as of March 2026. Its capital adequacy ratio rebounded from 6.22% in 2018 to 26.65% in March 2026.
Further, the bank moved from restrictions placed on it under RBI’s PCA framework to a record net profit of ₹9,513 crore in 2025-26.
Published – October 14, 2026 05:04 pm IST
