The acquisition has a purchase consideration of ₹52,878.08 crore and covers the Government of India's (GoI) 30.48% stake and the Life Insurance Corporation of India's (LIC) 30.24% stake in the bank, according to a government statement.
IDBI Bank is a scheduled commercial bank regulated by the Reserve Bank of India (RBI). The bank previously required repeated capital infusions because of its weak financial position, with support initially provided by the government and subsequently by LIC.
On May 5, 2017, the RBI placed IDBI Bank under the Prompt Corrective Action (PCA) framework and imposed several restrictions in view of its non-performing assets (NPAs) and losses. Following an improvement in the bank's financial health, the RBI lifted these restrictions through a letter dated March 10, 2021, subject to certain conditions and continued monitoring.
Government's IDBI Bank Disinvestment Plan
The CCEA approved the strategic disinvestment of IDBI Bank, under which a combined 60.72% equity stake held by the government and LIC was to be sold to a strategic buyer. Following the proposed transaction, the government will retain a 15% stake, while LIC will retain a 19% stake in the bank.
The disinvestment process followed a two-stage competitive bidding mechanism supported by a multi-layered decision-making structure comprising the Inter-Ministerial Group (IMG), the Core Group of Secretaries on Disinvestment (CGD) and the Alternative Mechanism (AM), an empowered group of Cabinet ministers.
The government issued the Preliminary Information Memorandum (PIM), inviting expressions of interest (EoIs) from interested parties, on October 7, 2022. Only parties deemed 'fit and proper' by the RBI and granted security clearance by the Ministry of Home Affairs (MHA) were eligible to proceed to the bidding stage.
A Request for Proposal was subsequently issued to invite technical and financial bids from qualified interested parties (QIPs). Of the five parties that initially submitted expressions of interest, four met the prescribed eligibility criteria and disqualification conditions. Two ultimately submitted techno-financial bids and qualified as bidders for the transaction.
Following a comprehensive evaluation by the CGD and consideration of the Alternative Mechanism's recommendations, the CCEA approved Fairfax Financial's parent entity as the successful strategic buyer.
How the Government Determined the IDBI Bank Sale Price
The government said there is no predetermined benchmark for bids in transactions of this nature. Bidders independently assess the value of an enterprise and submit confidential bids in sealed envelopes. Independent valuation agencies are appointed to assess the enterprise's fair value, which is then used as a benchmark to evaluate the reasonableness of the offers received.
The initial bids for the IDBI Bank transaction were invited in the financial year 2025-26. At that stage, the government fixed a reserve price of ₹94.42 per share, a figure influenced directly and indirectly by the prevailing market price.
The government noted that the bank's unaffected market price before the disinvestment process was ₹42.40 per share on the last trading day before the PIM and EoI were issued on October 7, 2022. By contrast, the market price had risen to ₹108.12 per share on January 8, 2026, the last trading day before the initial bids were invited.
The initial bids fell short of the reserve price and were not approved. After the unsuccessful bids became known, IDBI Bank's market price corrected sharply, falling significantly below the discovered bid price of ₹75 per share.
To maximise the value of the transaction, the government subsequently invited the qualified bidders to submit their best offers in sealed envelopes during the financial year 2026-27. The bank's share price stood at ₹70.38 on May 18, 2026, the last trading day before the invitation of best-offer bids.
Why the Government Relied on Independent Valuations
According to the government, IDBI Bank's stock price remained volatile during the valuation period, fluctuating between ₹61.01 and ₹118.38 per share. Given the stock's relatively narrow trading activity and price volatility, the market price was not considered a reliable indicator of the bank's intrinsic value.
Instead, the government relied on two independent valuation methodologies to determine the bank's fair value.
The first was the Relative Valuation by the Market Multiple Method, which assessed IDBI Bank's value by comparing it with other public sector banks using their financial results as of March 31, 2026.
The second was the Asset Valuation Method, which assessed the bank's net asset value based on its audited accounts as of March 31, 2026, taking into account tangible and intangible assets, including land and properties, as well as liabilities.
Two professional valuation agencies independently assessed the enterprise using these methodologies. The average of their fair value estimates worked out to ₹75.99 per share, which served as the benchmark for evaluating the qualified bids.
The successful bidder's offer of ₹81 per share exceeded the benchmark price and the fair value estimates provided by both valuation agencies. The government therefore considered the offer reasonable and approved it.
Regulatory Approvals and Further Stake Sale
The successful bidder will be required to present its credentials to the RBI in accordance with the fit-and-proper assessment conducted at the expression-of-interest stage and submit a roadmap for complying with the applicable regulatory conditions.
Upon completion, the transaction will represent the largest foreign direct investment (FDI) in India's financial sector to date, the government said.
The CCEA has also delegated powers to the Alternative Mechanism to undertake the sale of the government's residual 15% stake in IDBI Bank through the open market, in accordance with the prescribed standard operating procedure.
LIC will be free to manage its remaining 19% stake in the bank under its internal procedures, subject to compliance with directions issued by its regulators.