The Union Cabinet has approved the sale of a 60.72 per cent stake in IDBI Bank to a Canadian company backed by Fairfax Financial Holdings for Rs 52,878 crore. The deal will transfer majority ownership to the buyer, while the Centre and Life Insurance Corporation of India retain a combined minority of 34 per cent stake.
After completion, the government’s holding will fall to 15 per cent and LIC’s to 19 per cent. The Rs 52,878 crore is the consideration paid to the selling shareholders; it is not an announced capital injection directly into IDBI Bank. It already has Indian investments, including a 40 per cent stake in Kerala-based CSB Bank. The same report said Fairfax would have to reduce its IDBI Bank stake to 26 per cent over 15 years under a timetable to be agreed with the RBI. LIC is also expected to bring its residual IDBI holding down to 15 per cent within two years of completion. Deposits and loans will not be impacted by the change in ownership, and individual deposits up to Rs 5 lakh will stay protected under deposit insurance.
no immediate changes to accounts or interest rates have been announced While the finance ministry expects the new owner to bring in capital and expertise.
Both will withdraw their nominees from the bank’s board and become public shareholders, according to the finance ministry. Finance Minister Nirmala Sitharaman called the transaction a “strategic restructuring” rather than disinvestment. “It is not a disinvestment but a restructuring,” she said, referring to the government’s continuing stake.
Five parties initially expressed interest in the bank. Four cleared the qualification stage, but only two submitted final technical and financial bids. Fairfax is a Canadian financial services group led by Indian-born investor Prem Watsa. That holding presents a regulatory issue for the IDBI transaction. Fairfax must decide within two years whether to reduce its interest in CSB Bank or merge the two lenders, subject to regulatory requirements. For bank customers, day-to-day operations will remain unaffected and continue under RBI supervision.
