Centre, LIC to become public shareholders in IDBI Bank

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Following the strategic restructuring, the responsibility to run the bank and infuse capital whenever required would rest with the strategic buyer, he told PTI

By PTI

Updated - October 22, 2026 at 02:01 PM. | New Delhi

The government and Life Insurance Corporation of India (LIC) intend to become public shareholders in IDBI Bank after the proposed strategic sale to Fairfax Financial Holdings Ltd, with their equity holding capped at 15 per cent and without representation on the bank's board, DIPAM Secretary Arunish Chawla has said.

Following the strategic restructuring, the responsibility to run the bank and infuse capital whenever required would rest with the strategic buyer, he told PTI.

"Both the Government of India and LIC want to become public shareholders. To become public shareholders, you cannot hold more than 15 per cent equity. You also cannot sit on the board. Otherwise, you have the same contingent liability for the bank as a promoter has," he said.

The Department of Investment and Public Asset Management (DIPAM) Secretary further said that after the strategic restructuring, the responsibility of managing the bank and capitalising it from time to time would lie with the strategic buyer.

In addition, he said, the market regulator has directed LIC to reduce its stake in IDBI Bank from post-diluted 19 per cent to 15 per cent.

This would increase the bank's public float by an additional 4 percentage points, making more shares available to retail investors and other public shareholders.

Last week, the government approved the sale of a 60.72 per cent stake in IDBI Bank to Canada's Fairfax Financial Holdings for about ₹53,000 crore ($5.5 billion), in what would be the largest foreign investment in an Indian bank and a major milestone in the country's long-delayed banking privatisation drive.

Fairfax will be the strategic buyer of the government's 30.48 per cent stake, valued at about ₹26,620 crore, and the 30.24 per cent stake held by LIC, valued at about ₹26,440 crore.

Canadian billionaire Prem Watsa-led Fairfax will pay ₹81 per share, higher than the benchmark fair value of ₹75.99 determined by two independent valuation agencies.

The strategic transaction of IDBI Bank is expected to be completed by the end of the current financial year, subject to regulatory clearance from the Reserve Bank of India (RBI).

Fairfax will submit its technical papers to the RBI and present its credentials, including details required to meet additional compliance and regulatory requirements, Chawla said.

After the RBI clears this, the share purchase agreement will be signed, paving the way for the transaction to be completed before the end of the current financial year, he said.

Addressing concerns over the interests of minority and retail shareholders, the Secretary assured that their interests would be fully protected as part of the transaction.

After the share purchase agreement is signed, the strategic buyer will be required to make an open offer to minority shareholders, providing them an opportunity to tender their shares in accordance with applicable regulations.

Chawla said IDBI Bank restructuring is the biggest ever strategic transaction and would attract the largest FDI.

The deal marks a major milestone in a long-delayed effort to privatise IDBI Bank and reduce state ownership of commercial enterprises. The sale process began in 2022 and faced a setback earlier this year when initial bids fell below the government's reserve price.

Published on October 22, 2026

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