The government approved the sale of a 60.72% stake in IDBI Bank to Fairfax Financial Holdings for Rs 52,878 crore. This deal marks a major shift for the lender. After years of financial stress, the bank showed strong recovery, with gross bad loans falling to 2.32% by March 2026.
The government has approved the sale of a 60.72% stake in IDBI Bank to Fairfax Financial Holdings' parent entity, Canada Inc, for Rs 52,878 crore.
The proposed sale of a 60.72% stake in IDBI Bank Ltd to Canada-based Fairfax Financial Holdings Ltd, through its parent entity Canada Inc, for Rs 52,878 crore marks a significant milestone in the lender's transformation. The government's approval of the transaction comes five years after the strategic disinvestment plan was first proposed, paving the way for a change in ownership after years of financial stress, government support and balance-sheet repair.
From its origins as a development finance institution to its emergence as a commercial bank, IDBI Bank's history reflects the changing priorities of India's financial sector. Here is a timeline of the institution's evolution, its bad-loan crisis, recovery and proposed ownership transition.
In 2018, the bank's asset quality deteriorated sharply, with gross non-performing assets (NPAs) reaching 31.78% of advances. Net NPAs stood at 17.30%, reflecting the severity of the bad-loan crisis.
The Reserve Bank of India (RBI) placed IDBI Bank under its Prompt Corrective Action (PCA) framework, restricting certain activities while the lender worked to strengthen its capital position and improve asset quality.
The recovery process involved substantial financial support from the government, which infused around Rs 25,000 crore into the bank between 2010 and 2020. Life Insurance Corporation of India (LIC) also acquired a controlling stake, becoming a key shareholder in the lender's restructuring and recovery.
In May 2021, the government gave in-principle approval for strategic disinvestment in IDBI Bank. The objective was to transfer management control to a strategic investor and reduce the lender's dependence on government and LIC support.
Over 2021-2026, the bank made substantial progress in reducing bad loans and strengthening its capital position. Gross NPAs declined to 2.32% in March 2026 from 31.78% in September 2018, while net NPAs fell to 0.15% from 17.30% over the same period.
Its capital adequacy ratio improved to 26.65% in March 2026, reflecting a stronger capital position.
IDBI Bank reported a record net profit of Rs 9,513 crore in the financial year ended March 2026, an increase of around 27% from Rs 7,515 crore in the previous financial year.
Total deposits rose 12% year-on-year to Rs 3.47 trillion, while net advances increased 16% to Rs 2.54 trillion. The bank's improving financial performance marked a significant shift from the period when bad loans and capital constraints dominated its outlook.
The government has approved the sale of a 60.72% stake in IDBI Bank to Canada Inc, the parent entity of Fairfax Financial Holdings Ltd, for Rs 52,878 crore. The transaction marks a potential turning point for the lender, shifting the focus from financial rehabilitation to growth under a new ownership structure.