Version 1: Fairfax gets the nod to buy 60.72% of IDBI Bank for Rs 52,878 crore

The Cabinet cleared India's biggest foreign investment in finance on 14 October. Here is who sells, who buys, and what changes for the bank.

Picture a bank with more than 20,000 employees getting a new boss from Canada. That is now on the way. On Wednesday, 14 October 2026, India's Union Cabinet approved the sale of a 60.72% stake in IDBI Bank to a company backed by Fairfax Financial Holdings, for Rs 52,878 crore.

Finance Minister Nirmala Sitharaman said it would be the largest foreign direct investment in India's financial sector so far. Here is what happened, in plain words.

First, what is a "stake"?

Imagine five friends who put money together to start a samosa stall. Each friend owns a piece of the stall. That piece is called a stake. If one friend owns 60 pieces out of 100, that friend owns 60% and gets the biggest say in how the stall is run.

A big company works the same way, just with crores of pieces called shares. Whoever owns most of the shares controls the company.

A big number counting up to Rs 52,878 crore beside rising bars — The full price for 60.72% of IDBI Bank

Who owned IDBI Bank until now?

Two owners held almost all of it. The government owned 45.5% and the state-run insurer Life Insurance Corporation of India (LIC) owned 49.2%.

Under the deal, the government will sell 30.48% and LIC will sell 30.24% to a Fairfax-backed company called 10955230 Canada Inc. Add the two together and you get 60.72%. After the sale, the government will keep 15% and LIC about 19%.

Two panels showing IDBI Bank owners before and after the sale — Two state owners step back, one new owner steps in

A simple way to see it: before, the government and LIC were like two captains sharing one cricket team. Now a new captain arrives, and the old two stay on as players.

Who is Fairfax?

Fairfax Financial Holdings is a company based in Canada, led by the billionaire Prem Watsa. It is not new to Indian banking. It already holds a 40% stake in CSB Bank, a smaller lender from Thrissur in Kerala.

Indian rules say one group can be the main owner, or promoter, of only one bank at a time. So Fairfax has two years to either merge CSB Bank into IDBI Bank or sell its CSB stake. For size, IDBI Bank had about 1.2% of all bank loans and deposits in India at the end of June, while CSB Bank had 0.2%.

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Was Rs 81 a share a good price?

Fairfax won with a bid of Rs 81 per share. The benchmark price, worked out with the help of two independent valuation agencies, was Rs 75.99. Think of it as a fair-price check. Fairfax paid about Rs 5 more than that.

But there is a twist. In 2025-26, the government had set a higher reserve price of Rs 94.42 a share. A reserve price is like the lowest price a seller will take at an auction. The bids back then came in below it, so the government went back and redid its sums.

Three bars comparing the benchmark price, the Fairfax bid and last year's reserve price — The winning bid sat between the new benchmark and the old reserve price

The search for a buyer was long. Five players showed interest in October 2022. Four were found fit, and only two placed a money bid. The government did not name the losing bidder, though Reuters had reported in July that it was Dubai's Emirates NBD.

Why was IDBI Bank in trouble before?

For years, IDBI Bank had too many bad loans. A bad loan, or non-performing asset, is money lent out that is not coming back on time. Think of lending pocket money to a friend who keeps saying "next week" for months.

In May 2017, the Reserve Bank of India (RBI) put the bank under its Prompt Corrective Action rules. This works like a coach benching a player until form returns: the bank faced limits on what it could do. The RBI lifted those limits in March 2021.

Help came in many rounds. The government put in Rs 25,000 crore of capital over the years, and in 2019 LIC bought a 51% stake for Rs 21,624 crore.

The turnaround is clear in the numbers. The share of bad loans fell from 31.8% in September 2018 to 2.3% in March 2026, and the bank earned a record net profit of Rs 9,513 crore in 2025-26.

What did the share price do?

On the day of the decision, IDBI Bank shares closed at Rs 90.44, up from Rs 82.92 a day earlier, as traders expected the approval. The very next day, 15 October, the shares fell about 7.5% to Rs 83.62.

What happens next?

The deal is not done yet. Fairfax has to show its papers to the RBI and pass a "fit and proper" check. After the RBI clears it, the share purchase agreement will be signed, and the deal is expected to close this financial year.

Then comes an open offer. That means Fairfax must offer to buy shares from small public shareholders too, so they also get a chance to sell.

There are long rules as well:

Fairfax must bring its stake down to 26% over 15 years, and its voting power is capped at 26% from day one.
The government and LIC must stay invested for at least three years, and the IDBI Bank name will stay for that time too.
LIC must cut its holding to 15% within two years.

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What about staff and customers?

Bank unions are unhappy. The United Forum of Bank Unions called the move "privatisation" and "foreignisation", and asked members to wear black badges on 16 October.

The government says staff and pensioners are safe. Arunish Chawla, secretary of the Department of Investment and Public Asset Management, told Business Today: "The service conditions will be fully protected." Mint reports that these promises are written into the share purchase agreement.

For customers, a finance ministry official told The Hindu that no depositor or borrower is affected, and deposits stay insured up to Rs 5 lakh per depositor.

Why does the government care so much?

Selling stakes in state-owned companies is called disinvestment. It is like selling an old bicycle you no longer use to raise cash for something new. So far this year, the government has raised Rs 62,124 crore this way. With the IDBI Bank money, that will cross Rs 88,000 crore, beating its target of Rs 80,000 crore for the year.

The bigger story: a state-owned bank is passing into private, foreign hands, and experts quoted by Mint say the harder test will be changing how a big, old, union-heavy bank works from the inside.

As it was first published

Fairfax gets the nod to buy 60.72% of IDBI Bank for Rs 52,878 crore