Govt Approves IDBI Bank Stake Sale To Fairfax For Rs 52,878 Cr FM Says Deal Will Boost Banking Sector

(MENAFN- KNN India) New Delhi, Oct 15 (KNN) The Cabinet Committee on Economic Affairs (CCEA) on Tuesday approved the sale of a 60.72 per cent stake in IDBI Bank to Fairfax Financial Holdings for Rs 52,878 crore, paving the way for the transfer of management control to the Canadian financial services group.

Finance Minister Nirmala Sitharaman said the transaction would attract foreign investment while allowing the government to retain a minority stake in the lender.

In a post on X, Sitharaman said the government had supported IDBI Bank's recovery and was now facilitating its next phase of growth through strategic restructuring.

“This will not only strengthen the banking ecosystem but also help banking services surpass global benchmarks. It reinforces that India's growth story is strong, its economy is resilient, and the government's commitment to reform is unwavering,” she said.

Govt, LIC To Sell Their Combined 60.72% Stake

The proposed transaction involves the sale of 30.48 per cent equity held by the government and 30.24 per cent held by the Life Insurance Corporation of India (LIC), according to a Finance Ministry statement.

The government described the proposed sale as the largest foreign direct investment (FDI) in India's financial sector to date.

The transaction, following a process spanning more than five years, marks a major step in the government's efforts to reduce its ownership in state-controlled assets and attract private investment into the banking sector.

Sale Subject To RBI Approval, Regulatory Conditions

The successful bidder will be required to undergo the Reserve Bank of India's (RBI) fit-and-proper assessment and submit a roadmap for complying with the prescribed regulatory conditions.

Following the transaction, the government and LIC will together retain a minority stake of around 34 per cent in IDBI Bank.

The CCEA has also delegated powers to the Alternative Mechanism to undertake the sale of the government's residual 15 per cent stake through the open market, in accordance with the standard operating procedure.

LIC will be free to manage its remaining shareholding under its internal procedures, subject to regulatory directions.

The transaction remains subject to the completion of required regulatory and other formalities.

(KNN Bureau)

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