Prem Watsa-controlled Fairfax Financial Holdings will buy a 60.72% stake in IDBI Bank for Rs 52,878.08 crore, making it India’s biggest cross-border deal in the financial sector and marking a milestone the privatisation drive of state-controlled banks.

The Union Cabinet on Wednesday approved the sale, which will mean the government and Life Insurance Corporation of India (LIC) shedding 30.48% and 30.24% stake, respectively, in IDBI Bank.

Post the transaction, the government will retain a 15% stake and state-run LIC 19%, taking their combined holding in IDBI Bank to 34%.

Fairfax, led by Canadian billionaire Watsa, will offer Rs 81 per share for IDBI Bank above the benchmark price of 75.99 per share determined by the government based on fair valuations.

“The Cabinet Committee on Economic Affairs (CCEA) approved M/s 10955230 Canada Inc (a subsidiary of Fairfax) as the strategic buyer for this transaction for a purchase consideration of Rs 52,877.07 crore for the acquisition of 60.72% stake in IDBI Bank, comprising 30.48% equity held by the GoI and 30.24% by the LIC," an official statement said.

The sale of IDBI Bank has been in process for over four years.

Department of Investment and Public Asset Management (DIPAM) Secretary Arunish Chawla said the deal will be completed before the end of the current fiscal.

CSB to merge or be sold

Since Fairfax holds a 40% stake in CSB, it will have to either merge it with IDBI Bank or exit from it within two years. The Reserve Bank of India’s regulation does not allow a single promoter in two banking businesses.

What will Fairfax get

IDBI Bank’s total business stood at Rs 6.27 lakh crore as of 30 September 2026, up 18% from the year-ago period. 

Net advances rose 18% year-on-year to Rs 2.72 lakh crore while deposits stood at Rs 3.56 lakh crore, up 17%.

While announcing the Q2 business update, the bank is yet to announce its financial performance for the September quarter 

During the April-June quarter, the bank reported a 5% YoY rise in net profit to Rs 2,115 crore.

The lender’s gross non-performing assets (NPAs) ratio improved to 2.30% from 2.93% a year earlier. The gross NPA was at 31.78% and net NPA at 17.30% in September 2018 before the asset quality started improving progressively . 

The bank has over 2,000 branches across the country.

Sale process

The plan ​to sell the IDBI stake ⁠was first announced in 2022 but faced a setback this March when bids fell below the government's reserve price of Rs 94.42 per share. 

The government subsequently restarted the bids and lowered its price expectations. The average fair valuation done by valuers was Rs 75.99 per share and this served as the benchmark for evaluating the bids.

Fairfax’s successful bid of Rs 81 per share was above the benchmark as well as the fair value estimates of both agencies, and was consequently considered reasonable and approved by the CCEA, an official statement said.

The transaction will require approvals from the RBI, which will conduct a “fit and proper” assessment, as well as the Competition Commission of India (CCI) and other statutory authorities.

What did the govt say

Union minister Ashwini Vaishnaw hailed the deal, which was conducted in a transparent manner, as the largest FDI in India’s financial services sector. “The way India is growing, we need more growth capital. To meet the capital requirement, we need many institutions that can provide the same and also support MSMEs. With the help of a strategic partner, new capital will be infused,” he said.

Finance minister Nirmala Sitharaman said the government was enabling the bank’s next growth phase through the proposed restructuring after supporting its recovery. The infusion of foreign capital, while retaining a minority stake, would strengthen the banking ecosystem and help banking services meet global benchmarks, she said in a post on X. 

Foreign investment interest

With Indian banks reporting low non-performing loans and credit demand on the surge, the financial sector has seen foreign investments over the last two years.

Last year, Emirates NBD agreed to acquire a stake in private lender RBL Bank for $3 billion.

Japan's Sumitomo Mitsui Banking Corporation also bought a 20% stake ​in Yes Bank, while MUFG  acquired a similar stake in non-banking financial company Shriram Finance for $4.4 billion.