Fairfax’s ₹52,878 Crore Bid for IDBI Bank Marks a Landmark Foreign Investment

Synopsis

The Cabinet Committee on Economic Affairs (CCEA) has approved the Fairfax Financial Holdings to sell its stake of 60.72% in IDBI Bank at ₹81 apiece for ₹52,878.08 crore. The Sellers are the government and LIC. Reuters termed it the "biggest foreign investment in an Indian bank. The target date is the end of FY27 once approved by the Reserve Bank of India, and Fairfax will have to make an open sale to minority shareholders.

The sale of a 60.72% stake in IDBI Bank (₹52,878.08 crore) to the acquisition arm of Toronto-based Canada's Fairfax Financial Holdings (FFH) took the cabinet committee on Economic Affairs one step closer to completing one of the longest-running disinvestment initiatives in the country.

The cost and the procedure

The winning bid, which was the highest at ₹81 a share, was above the benchmark fair value of ₹75.99 a share decided by two independent valuation agencies. The Reserve Bank of India and the Home Ministry had to issue security clearance to the bidders who were deemed to be “fit and proper.” The government and Life Insurance Corp of India (LIC) are selling out the stake with 30.48% and 30.24% stake respectively, which was reviewed during the disinvestment process started in October 2022 in Business Standard's coverage. Reuters valued it at around ₹53,000 crore or $5.5 billion, which is the highest foreign investment in an Indian bank.

According to Business Standard's report dated December 2025, the other short-listed bidder was Kotak Mahindra Bank, which had already acquired a majority stake in CSB Bank in 2018 upon approval by RBI. Similarly, Business Standard reported that Fairfax had already got a majority stake of CSB Bank in 2018 on RBI's approval.

What happens next

This deal is not finalised. Arunish Chawla, Secretary of the Department of Investment and Public Asset Management, told PTI that the process is expected to be completed by the end of FY27, on RBI approval.

The winner will have to show its credentials to the RBI in terms of fit and proper assessment and provide a plan of action as per the conditions of regulatory requirements. After clearance has been obtained, the parties will sign the share purchase agreement. Furthermore, Fairfax will be offering open bids for extra IDBI Bank shares to safeguard minority shareholders.

Prameya News, a smaller outlet that The Veritas could not verify with the RBI, claimed that foreign entities can hold up to 74% of Indian private lenders, and the regulators’ timeline to reduce the promoter’s stake to the 26% cap is five years plus lock-in, followed by 15 years.

The RBI's prohibition on one entity having more than one bank will mean that the company will need to sell CSB bank or merge its banking operations with time, the same report added. These points are reported and are subject to confirmation by the regulators.

Why it matters

The sale is a significant step towards banking privatisation by the government. It will leave in charge of a well-capitalised foreign promoter a lender with a vast branch network for the sector. The open offer and condition laid down by the RBI will be the deciding factor for the terms in which the minority shareholders will be treated. According to Prameya, Fairfax is headed by an insurance-float investor, Indian-origin guy Prem Watsa.

Outlook

The next milestones will be the decision of the RBI, the signing of the share purchase agreement and the open offer. Approval marks the end of the bidding process but not the transfer of control until then.