The Cabinet on Wednesday approved the sale of a 60.72 per cent stake in IDBI Bank to Fairfax Financial Holdings for Rs 52,878 crore, ending a highly anticipated process that has stretched over five years. The IDBI Bank’s disinvestment becomes the country's biggest strategic stake sale since the sale of Air India. 

Information and Broadcasting Minister Ashwini Vaishnaw, while addressing reporters, said that the government and LIC will together hold a 34 per cent stake in the restructured entity, while offloading a 60.72 per cent stake. 

"Once completed, this will be the largest FDI in the financial sector of our economy so far," the government said in a statement.

The decision, which was taken by the Cabinet Committee on Economic Affairs (CCEA), headed by Prime Minister Narendra Modi, has potentially opened a new chapter in the privatisation of state-controlled banks, showing the government's efforts to attract private capital into the financial sector.

Who Is Buying Stake? 

The combined 60.72 per cent stake held by the government and Life Insurance Corporation of India (LIC) would transfer control of the lender to Fairfax under the proposed stake sale. However, this will be subject to the completion of the transaction and requisite regulatory approvals.

"The CCEA ...approved M/s 10955230 Canada Inc (parent entity M/s Fairfax Financial Holdings Ltd) as the strategic buyer for this transaction for a purchase consideration of Rs 52,877.07 crore for the acquisition of 60.72 per cent stake in IDBI Bank, comprising 30.48 per cent equity held by the GoI and 30.24 per cent by the LIC," the statement said.

Fairfax should also make an open offer to minority shareholders. Additionally, Fairfax, which has a stake in CSB, should either merge it with IDBI Bank within two years or exit the partnership.

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Nine-Year Journey Concluded 

Here is a timeline of key events across the nine-year journey leading up to the sale of the government's stake in IDBI Bank to Fairfax for Rs 52,878 crore.

May 2017: The Reserve Bank of India places IDBI Bank under its Prompt Corrective Action (PCA) framework following breaches in capital adequacy, asset quality, return on assets, and leverage thresholds, with net non-performing assets surpassing 13 per cent by March 2017.

January 2019: Life Insurance Corporation of India acquires a controlling 51 per cent stake in IDBI Bank, prompting the RBI to categorise it as a private-sector lender for regulatory oversight.

March 2021: The RBI exits IDBI Bank from the PCA framework after nearly four years, noting sustained improvement in its operational and financial metrics.

April 2021: LIC gives its approval to dilute its equity share in IDBI Bank in line with the government's planned strategic disinvestment.

May 2021: The CCEA formally approves the strategic sale of stakes held by both the government and LIC in IDBI Bank, including the transfer of management control.

October 2022: The government seeks expressions of interest for the sale of a combined 60.72 per cent stake (30.48 per cent from the government and 30.24 per cent from LIC).

January 2023: Multiple expressions of interest are submitted by interested potential investors.

July 2024: Bidders obtain essential security clearances from the Ministry of Home Affairs and clear the RBI's fit-and-proper assessment.

January 2026: Financial bids for the proposed stake sale are officially invited by the government.

February 2026: Offers are received fromPrem Watsa-led Fairfax Financial Holdings and Dubai-based Emirates NBD.

March 2026: The disinvestment process is temporarily paused as submitted financial bids come in below the set reserve price.

April 2026: The government restarts the disinvestment effort and conducts a technical assessment of potential next steps.

July 2026: Bidders are invited to submit revised financial offers, with updated bids received from both Fairfax Financial Holdings and Emirates NBD.

October 2026: The CCEA gives final approval for Fairfax to acquire a 60.72 per cent controlling stake in IDBI Bank for Rs 52,878 crore, leaving the Government and LIC with a combined 34 per cent holding post-sale.

(With Inputs From PTI)