India’s Cabinet Committee on Economic Affairs approved the sale of a 60.72% stake in IDBI Bank to Fairfax Financial Holdings of Canada for ₹528.78 billion, advancing one of the government’s largest banking-sector privatisation transactions.

The winning bid was ₹81 per share, above the ₹75.99 benchmark derived from independent valuations, the government said on October 14.

The stake comprises 30.48% held by the Government of India and 30.24% held by Life Insurance Corporation of India.

After the transaction, the government will retain a 15% stake in IDBI Bank and LIC will hold 19%.

The government said the deal will become India’s largest foreign direct investment in the financial sector once completed.

The sale followed a two-stage competitive bidding process. Five parties initially submitted expressions of interest, four qualified, and two eventually submitted financial bids.

The government had previously invited bids in 2025-2026, when the reserve price was ₹94.42 per share. Those bids were not approved after falling short of the reserve price.

The government said the earlier reserve price was influenced by IDBI Bank’s market price, which had risen to ₹108.12 before the initial bids were invited in January 2026.

After those bids failed, the share price corrected below the discovered bid level of ₹75 per share.

Fresh best-offer bids were later invited in 2026-2027. IDBI Bank shares were at ₹70.38 on the last trading day before the May 18 invitation.

The government said the stock’s volatility made the market price unsuitable as the sole valuation benchmark. The shares traded between ₹61.01 and ₹118.38 during the valuation period.

Two independent valuation agencies instead used a market-multiple method and an asset-valuation method based on IDBI Bank’s March 31, 2026 audited accounts and public-sector bank comparables.

The average fair value from the two methods was ₹75.99 per share.

Fairfax’s ₹81-per-share offer was above that benchmark and the estimates of both valuation agencies, and was therefore approved as reasonable, the government said.

The successful bidder will still need to present its credentials to the RBI and submit a roadmap for complying with regulatory conditions linked to the earlier fit-and-proper assessment.

The Cabinet also authorised the government to sell its residual 15% stake in IDBI Bank through the open market under the standard operating procedure.

LIC will be free to manage its remaining holding subject to regulatory requirements.

IDBI Bank had been placed under the RBI’s Prompt Corrective Action framework in May 2017 because of weak financial health, high non-performing assets and losses. The RBI removed those restrictions in March 2021 after the bank’s financial position improved.