IDBI Bank-Fairfax Deal: Nine-Year Journey From RBI Curbs To Stake Sale

The government's proposed sale of its stake in IDBI Bank, alongside Life Insurance Corporation of India's (LIC) holding, has reached a key milestone with the Cabinet Committee on Economic Affairs (CCEA) approving the strategic restructuring of the lender on Wednesday.

Fairfax Financial Holdings will acquire a 60.72% controlling stake for ₹52,878 crore, while the government and LIC will together retain a 34% stake. The deal will be India's largest-ever FDI in the financial sector and its biggest strategic disinvestment since the sale of Air India.

The process began with the Reserve Bank of India's (RBI) corrective action against the bank in 2017 and moved through changes in ownership, regulatory clearances, bidding rounds and a temporary pause before reaching the latest stage. The stake sale was delayed by the time taken to complete regulatory clearances and the failure of initial financial bids to meet the government's reserve price.

Here is a timeline of the key developments in the nine-year journey:

May 2017: IDBI Bank Placed Under PCA Framework

The RBI placed IDBI Bank under the Prompt Corrective Action (PCA) framework after the lender breached thresholds for capital adequacy, asset quality, return on assets and leverage. Its net non-performing assets (NPAs) exceeded 13% in March 2017.

January 2019: LIC Acquires Controlling Stake

LIC acquired a 51% controlling stake in IDBI Bank. The RBI subsequently classified the lender as a private-sector bank for regulatory purposes.

March 2021: RBI Removes Bank From PCA

The RBI removed IDBI Bank from the PCA framework after nearly four years, citing an improvement in its financial performance.

April 2021: LIC Approves Stake Dilution Proposal

LIC approved a proposal to reduce its stake in IDBI Bank through equity dilution alongside the government's planned strategic disinvestment.

May 2021: Cabinet Approves Strategic Sale

The Cabinet Committee on Economic Affairs approved the strategic sale of the government's and LIC's stakes in IDBI Bank, including the transfer of management control.

October 2022: Govt Invites Expressions Of Interest

The government invited expressions of interest (EoIs) for the sale of a 60.72% stake in IDBI Bank. The proposed sale comprised a 30.48% stake held by the government and a 30.24% stake held by LIC.

By January 2023, the government received multiple expressions of interest from prospective bidders for the proposed stake sale.

July 2024: Bidders Receive Regulatory Clearances

Prospective bidders received the required security clearances from the Union Home Ministry and underwent the RBI's fit-and-proper assessment.

January 2026: Financial Bidding Begins

The government invited financial bids for the proposed stake sale.

February 2026: Fairfax and Emirates NBD Submit Bids

The government received financial bids from Fairfax Financial Holdings, led by Prem Watsa, and Dubai-based Emirates NBD.

March 2026: Sale Process Put On Hold

The government put the disinvestment process on hold after the financial bids fell below the reserve price.

April 2026: Govt Revives Disinvestment Process

The government revived the stake sale process and undertook a technical evaluation to determine the way forward.

July 2026: Revised Financial Bids Invited

The government invited revised financial bids and subsequently received updated offers from Fairfax Financial Holdings and Emirates NBD.

October 2026: CCEA Approves Strategic Restructuring

The CCEA, on October 14, approved the strategic restructuring of IDBI Bank, paving the way for Fairfax to acquire a 60.72% controlling stake for ₹52,878 crore. The government and LIC will together retain a 34% stake following the transaction.