New Delhi: Canada’s Fairfax Financial Holdings is set to take control of IDBI Bank, in what the government says will be the largest foreign direct investment in India’s financial sector once the deal closes.
The Cabinet Committee on Economic Affairs cleared the sale on October 14, 2026. A Fairfax subsidiary, 10955230 Canada Inc., will buy 60.72% of the bank for INR 52,878.08 crore. The government is selling 30.48% and Life Insurance Corporation of India (LIC) 30.24%. Between them, they will keep 34%: 15% with the government and 19% with LIC.
The price works out to INR 81 a share. Fairfax puts the total at about US$5.6 billion, roughly a 23% premium to IDBI Bank’s book value as of June 30, 2026.
“We are very excited to be selected by the Government of India to be the purchaser of the Government’s interest in IDBI Bank,” said Prem Watsa, Chairman and Chief Executive Officer of Fairfax Financial Holdings. “We assure the Government of India that we are committed to building the world’s finest financial institution from India.”
A bank that has come a long way
The sale caps a long recovery. In May 2017, the Reserve Bank of India placed IDBI Bank under its Prompt Corrective Action framework because of bad loans and losses, and the government and LIC had to put in capital more than once. The RBI lifted those restrictions in March 2021, subject to conditions and continued monitoring.
The government began looking for a buyer on October 7, 2022. On the last trading day before that, IDBI shares stood at INR 42.40.
Getting to INR 81
It took two attempts. Five parties showed interest, four qualified and two put in final bids. In the first round, held in the 2025 to 2026 financial year, the government set a reserve price of INR 94.42 a share. Neither bid reached it, and the round was rejected.
The government then asked both bidders for their best offers in the 2026 to 2027 financial year. This time it ignored the share price, which had swung between INR 118.38 and INR 61.01 during the valuation period. Two independent valuers studied the bank using separate methods and arrived at an average of INR 75.99 a share. Fairfax’s INR 81 cleared that benchmark and both individual valuations.
More than a bank
Fairfax has a larger plan. It wants to fold its holdings in Digit, made up of Go Digit Life Insurance and Go Digit General Insurance, and in IIFL Capital Services into IDBI Bank at market prices. The aim, it says, is to turn IDBI over time into a leading global Indian bank headquartered in India.
“We are very excited about the prospect of combining Digit with IDBI Bank as it would significantly strengthen Digit’s distribution footprint, allowing us to continue our growth and service offerings for the benefit of all Indians,” said Kamesh Goyal, Founder and Chairman of Digit.
Nirmal Jain, Founder of IIFL Group, said: “By combining our capital markets expertise with the scale and customer reach of a leading bank, we can bring a broader range of investment and wealth solutions to millions of customers.”
Rakesh Sharma, IDBI Bank’s Managing Director and CEO, is expected to stay on and run the combined business. Fairfax also plans to bring in C. VR. Rajendran, former CEO of CSB Bank, and N. S. Kannan, former head of ICICI Prudential Life and former CFO of ICICI Bank, who would serve as Chairman. All three need RBI approval.
Not done yet
No binding agreements have been signed. Fairfax still has to satisfy the RBI’s fit and proper test and lay out how it will meet the regulator’s conditions. Merging Digit and IIFL Capital into the bank needs further approval from the RBI and the Securities and Exchange Board of India, and Digit also needs the insurance regulator’s approval. Fairfax says the bank purchase could still go through even if those mergers do not.
Fairfax plans to pay with cash, existing credit lines and possible asset sales. The government, for its part, can now sell its remaining 15% on the open market, while LIC is free to manage its 19% stake.
The IDBI Bank sale in numbers
- Stake sold: 60.72% (government 30.48%, LIC 30.24%)
- Price: INR 81 a share, INR 52,878.08 crore in total
- Fair value benchmark: INR 75.99 a share
- Rejected first round reserve price: INR 94.42 a share
- Share price before the sale began: INR 42.40 (October 2022)
- Stake retained: government 15%, LIC 19%
- Bidders: 5 showed interest, 4 qualified, 2 made final bids
The Narrative Republic: Growing With India
Our analysis
This deal answers a question India has long been cautious about: will the state hand control of a major lender to a foreign owner? Now it has, and the outcome will shape every bank sale that follows.
The government deserves credit for how it got here. It refused to sell below its first reserve price, then anchored the second round to independent valuations instead of a jumpy share price. The result is a price almost double where IDBI traded when the process began in 2022.
Fairfax’s real bet is bigger than one bank. Putting lending, insurance and wealth management under one roof gives Digit and IIFL Capital a ready customer base, and gives IDBI products to sell beyond loans and deposits. If that model works, other global investors eyeing Indian finance will take note.
The hard part is still ahead. Three regulators must sign off on the full plan, no binding contract exists yet, and the government and LIC will keep a 34% voice in the bank. How much freedom a foreign owner gets in practice will matter as much as the price it paid.
Can a foreign owned IDBI Bank become the model for the next wave of bank privatisation in India?
