IDBI Bank reported a record net profit of ₹9,513 crore in FY26. Yet the government and LIC are selling a 60.72% stake in the bank to Canada’s Fairfax Financial Holdings for ₹52,878 crore. Here is why, and what it means for shareholders and customers.
From crisis to recovery
In September 2018, 31.78% of IDBI Bank’s loans had turned bad, and net bad loans stood at 17.30%. The government put in about ₹25,000 crore between 2010 and 2020. In 2019, LIC took a controlling stake, and the RBI later classified IDBI as a private sector bank.
By March 2026, the picture had changed:
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| Metric | September 2018 | March 2026 |
|---|---|---|
| Gross bad loans | 31.78% | 2.32% |
| Net bad loans | 17.30% | 0.15% |
The bank also posted a record net profit of ₹9,513 crore in FY26, up about 27% from ₹7,515 crore in FY25, and its capital adequacy ratio stood at 26.65% in March 2026.
Why sell a profitable bank?
The decision was taken years ago. In May 2021, the Cabinet gave in-principle approval for a strategic sale of IDBI Bank. The aim was for the government and LIC to stop running the bank, not to time the sale with its performance.
The first attempt failed. The best bid was ₹75 a share, below the government’s reserve price of ₹94.42, so the bids were rejected.
The Fairfax deal
- Stake: 60.72% from the government and LIC
- Price: ₹81 a share
- Total value: ₹52,878 crore, described as the largest FDI deal in India’s banking sector
- Market price before the deal: ₹89.85, so the deal is about 10% below market
- Fair value: ₹75.99 a share, as assessed by two independent valuers
The government said the market price was not the right benchmark because the share is thinly traded, with the government and LIC holding close to 95% of the bank.
How shareholders reacted
IDBI Bank shares fell over 7% on October 15, after the deal price came in below the market price. After the sale, the government and LIC will still hold about 34% together.
What changes for customers
For now, nothing. Accounts, fixed deposits and loans continue on the same terms, and account numbers, IFSC codes, UPI and cards work as usual. Fairfax must keep the IDBI name and logo for at least three years. The deal still needs RBI approval and is expected to close this financial year.
Frequently asked questions
Who is buying IDBI Bank?
Fairfax Financial Holdings, through its Canadian unit, is buying a 60.72% stake from the government and LIC.
How much is Fairfax paying?
₹81 a share, or ₹52,878 crore in total.
Why is the government selling IDBI Bank now?
The Cabinet approved a strategic sale in May 2021. The aim was to exit running the bank. An earlier round failed when the best bid of ₹75 a share fell short of the ₹94.42 reserve price.
Is ₹81 a share a fair price?
It is about 10% below the pre-deal market price of ₹89.85, but above the ₹75.99 fair value set by two independent valuers.
What happens to IDBI customers’ accounts?
Accounts, fixed deposits and loans continue on the same terms. Account numbers, IFSC codes, UPI and cards are not affected by the change of ownership.
Will IDBI Bank change its name?
Fairfax has to retain the IDBI name and logo for at least three years after signing.
How much will the government and LIC hold after the sale?
About 34% together. The Centre will keep 15% and LIC 19%, as per Business Today and Business Standard.
Sources: Business Standard, Business Today, IDBI Bank results, Goodreturns, PTI. Illustration: Buzzpedia.
