New Delhi. The government’s years-long struggle to sell IDBI Bank seems to be reaching its culmination. After high-level meetings held in the Ministry of Finance on Tuesday, this much-awaited deal has been agreed between the government and Fairfax Holdings, the company of Canadian industrialist Prem Watsa. Under this, the company will buy majority stake in the bank for Rs 53,000 crore. This deal will not only help the government on the disinvestment front, but will also write a new chapter in the history of Indian banking.
The empowered group of ministers led by Finance Minister Nirmala Sitharaman has been informed of this revised bid. A formal notification and expression of interest in this regard will be issued soon, after which the share-purchase agreement will be signed. Since Fairfax is taking the stake as a promoter, the company will also have to make an open offer to common shareholders.
At the new price, the government can raise about Rs 26,620 crore by selling 30.48 per cent of its 45.48 per cent stake in the bank. Apart from this, Life Insurance Corporation of India (LIC), which holds a little less than 50 per cent stake in the bank, is also planning to sell its 30.24 per cent stake.
Previous record will be broken
The largest ever foreign investment in the Indian banking sector was seen in the year 2025, when Emirates NBD bought 60 per cent stake of RBL Bank for $2.75 billion. This deal of IDBI Bank will almost double that record.
Fairfax will further have to follow some banking rules. Fairfax’s Indian arm already holds 40 per cent stake in CSB Bank. According to banking rules, the promoter will have to merge CSB and IDBI Bank, for which the Reserve Bank of India may give some additional time. Apart from this, fit and proper investigation by RBI and approval of Competition Commission of India will also be required before finalizing the deal.
Budgetary targets will gain momentum
The government has set a target of raising Rs 80,000 crore through asset monetization in the current financial year 2026-27. Of this, till now it has been able to raise only Rs 20,272 crore. After receiving Rs 26,620 crore from IDBI Bank, the government will come very close to this target. After this, the government can also sell some of its stake in companies like Coal India and LIC.
This will be the longest disinvestment process
The privatization process of IDBI Bank is one of the longest drawn out disinvestment cases in Indian banking history. It was started on January 21, 2019.
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