Government, LIC to sell majority stake in IDBI Bank to Fairfax

The Cabinet Committee on Economic Affairs has greenlit the divestment of IDBI Bank's controlling stake, with the government selling its 30.48 per cent holding and Life Insurance Corporation of India offloading an equivalent 30.24 per cent stake to Fairfax Group. The transaction, valued at over ₹52,000 crore, represents a landmark entry for foreign capital into India's banking sector and signals the government's continued push to reduce public sector holdings in non-core financial entities.

Once the acquisition is completed, Fairfax will become IDBI Bank's majority shareholder, assuming operational and strategic control of the lender. The move aligns with the government's disinvestment agenda and provides a structured exit for both state entities from the private sector-focused bank, which has faced profitability challenges in recent years.

IDBI Bank, which was established as the Industrial Development Bank of India before transitioning to a universal banking model, has undergone significant restructuring. The Fairfax acquisition is expected to bring international expertise and capital to strengthen the bank's balance sheet and operational efficiency. The transaction is subject to regulatory approvals and customary closing conditions.

This divestment marks a significant milestone in India's efforts to attract foreign institutional investment in its financial infrastructure and underscores the government's confidence in the country's banking sector's growth potential despite near-term headwinds.