1 hour ago
The Cabinet Committee on Economic Affairs (CCEA) on Wednesday, October 14, approved the long-awaited strategic restructuring of IDBI Bank in a deal valued at over ₹52,878 crore, paving the way for what the government described as the largest foreign direct investment (FDI) transaction in India's banking sector.
Fairfax Financial has been selected as the qualified bidder for the IDBI Bank stake sale and will acquire shares at ₹81 apiece. The Canadian investor will also make an open offer for IDBI Bank shares following the transaction.
Under the approved structure, the Government of India will retain a 15% stake, while LIC will hold 19%, taking their combined shareholding in the restructured entity to 34%.
The government said the restructuring is intended to bring growth capital into the banking system, support India's economic expansion and strengthen credit availability for micro, small and medium enterprises (MSMEs).
As part of the approved roadmap, CSB Bank, in which Fairfax currently owns around 40%, will be merged with IDBI Bank within two years. The restructuring will be carried out in compliance with RBI, SEBI and other applicable regulatory requirements.
The approval concludes a privatisation effort that has stretched over several years and marks a significant step in reshaping IDBI Bank's ownership and capital structure.
Canada-based Fairfax Financial has emerged as the qualified bidder for the government's long-pending IDBI Bank stake sale and will acquire the lender at ₹81 per share.
Under the approved structure, the government and LIC will together retain a 34% stake in the restructured entity, while fresh capital is expected to support economic growth and boost lending to micro, small and medium enterprises (MSMEs).
As part of the transaction, CSB Bank, in which Fairfax currently holds around 40%, will be merged with IDBI Bank within two years.
The approval brings to a close a privatisation process that has seen multiple delays since the government first announced plans to sell its stake in IDBI Bank.
