India approves $5.5 billion sale of majority stake in IDBI Bank to Fairfax
The Indian government has cleared the sale of a 60.72% stake in IDBI Bank to Canada’s Fairfax Financial Holdings for roughly Rs 53,000 crore, marking the largest foreign investment in an Indian bank.
The government announced approval of a Rs 53,000 crore transaction that transfers a 60.72% controlling stake in IDBI Bank to Fairfax Financial Holdings, the largest foreign direct investment in an Indian bank to date. Fairfax will purchase the government’s 30.48% holding for about Rs 26,620 crore and LIC’s 30.24% holding for roughly Rs 26,440 crore. After signing the share purchase agreement, Fairfax must file technical documents with the RBI and meet additional regulatory requirements before making an open offer to the bank’s minority shareholders.
The RBI has also instructed LIC to reduce its stake from 19% to 15% post-sale, increasing the public float by four percentage points. Officials say the restructuring will protect existing employee service conditions and position the bank as a going concern. The deal is hailed as the biggest strategic transaction in India’s banking sector and a milestone in the government’s effort to privatise IDBI Bank and curb its commercial business exposure.
Why it matters
It brings the biggest foreign investment into an Indian bank, reshaping ownership and boosting the sector’s privatization.
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