Industry Odisha Bureau, Oct 15: Fairfax Financial Holdings has emerged as the highest bidder for 60.72% of IDBI Bank. The ₹52,878 crore sale would shrink state ownership. It reflects growing foreign investment in Indian lenders.
Overseas capital is steadily redrawing the ownership map of Indian banking. Over 12–18 months, the government and RBI have permitted sizeable foreign bank stakes. The clearest example yet arrived on Wednesday.
The government named Canada’s Fairfax Financial Holdings the highest bidder for IDBI Bank. The proposed ₹52,878 crore deal covers a 60.72% stake. It would hand control of a state-backed lender to a foreign investor.
The Centre will sell 30.48%, while Life Insurance Corporation of India (LIC) sells 30.24%. Together they would retain 34%. The transaction is expected to complete within FY2026–27.
The government first announced the IDBI Bank stake sale in 2022. Regulatory and procedural hurdles then stretched the process over three-and-a-half years. The Department of Investment and Public Asset Management (DIPAM) ran it with KPMG India. Dubai-based Emirates NBD was among the other potential buyers.
Equity is not control
Emirates NBD has pursued another Indian lender. Last year, it agreed to buy 60% of RBL Bank. Its voting rights, however, are capped at 26%. That gap matters. Large equity holdings need not translate into proportional voting power.
An industry executive said global banks are growing comfortable with such arrangements. How much control they exercise remains to be seen, the executive added.
Japan’s Sumitomo Mitsui Banking Corporation (SMBC) has moved step by step into Yes Bank. It completed a 20% purchase in September 2025, after RBI approval. It has also agreed to buy 4.2% more from CA Basque Investments. The seller is affiliated with The Carlyle Group. The deal would lift SMBC’s holding to 24.2%, against a 24.99% ceiling.
Foreign capital is also flowing into non-banking financial companies. Abu Dhabi’s Avenir Investment RSC agreed to buy 43.46% of Sammaan Capital for $1 billion. MUFG reportedly seeks control of Shriram Capital, valuing it above $20 billion. Mizuho is acquiring control of Avendus Capital, valuing it at about $800–900 million. The Economic Times reported possible ownership changes at Bandhan Bank last week.
Governance as the real test
IDBI Bank arrives at this moment far healthier than in its troubled years. Its gross non-performing asset ratio fell from 27.95% in FY18 to 2.32% in FY26. Loans nearly doubled from FY21, reaching ₹2,53,626 crore. Deposits rose to ₹3,47,163 crore over the same period.
Vivek Iyer of Grant Thornton Bharat sees the Fairfax deal as a starting point. He argued that efficient capital use and sound governance will drive banking growth. He also credited Fairfax with a deep understanding of Indian financial services.
Over 15–20 years, banks such as Citi, Deutsche Bank and RBS scaled back or left. That retreat is now reversing.
Prakash Bulusu, joint chief executive of IIFL Capital, sees a maturing market. Global capital, he said, brings technology, risk management and governance practices. But he tied the gains to sound governance and prudent lending.
Analysts expect more deals through minority stakes, co-branded offerings or fintech tie-ups. The IDBI Bank privatisation shows the state will cede control of a lender. Yet ownership alone will not make lenders stronger. Credit discipline and RBI oversight will decide the outcome.
