IDBI Bank shares fell more than 7% on Thursday, October 15, after the Union Cabinet approved the strategic sale of a 60.72% stake in the institutional lender to Canada‑based Fairfax Financial. The stock dropped 7.8% to touch an intraday low of ₹83.30 per share, down from ₹90.39 at the previous equity market close. The decline reflected market sentiment that the transaction would reduce the bank’s equity base and alter its ownership structure, prompting a sharp sell‑off among investors.

Trading activity surpassed 48 million equity shares across the National Stock Exchange and the Bombay Stock Exchange during the session, triggering high‑volume losses as investors actively traded the bank’s stock. The surge in volume coincided with the announcement of the Cabinet’s approval, indicating heightened investor interest and uncertainty about the implications of the stake sale on the bank’s future prospects.

After a meeting on October 14, the Cabinet Committee on Economic Affairs (CCEA) approved Canada Inc., the parent entity of Fairfax Financial Holdings, as the strategic buyer for the stake sale transaction. The total consideration for the 60.72% stake was reported to be around ₹52,878 crore, as per the official filing. The approval marked a decisive step in the government’s long‑term plan to privatise IDBI Bank and reduce state ownership of commercial enterprises.

The 60.72% stake sale will comprise a 30.48% sale by the Government of India and a 30.24% sale from the Life Insurance Corporation of India (LIC). Both the Government and LIC will receive the proceeds of the transaction in the same proportion as the stake sale, amounting to ₹52,878 crore. Following the transaction, the Government will retain a 15% equity stake in IDBI Bank, while LIC will hold a 19% stake, and both will remove their nominees from the bank’s board of directors, becoming public shareholders.

Fairfax will pay ₹81 per share for IDBI Bank, higher than the benchmark fair value of ₹75.99 determined by two independent valuation agencies. After the approval, Fairfax will present its credentials to the Reserve Bank of India as part of the ‘Fit & Proper’ assessment conducted at the EoI stage and submit a roadmap for compliance with regulatory conditions prescribed by the guidelines. The deal is a secondary market transaction, accretive to India’s fiscal and forex positions, and will lead to an open offer.

Analysts from US‑based investment firm Jefferies noted that Fairfax’s purchase reiterates the theme of changing faces of Indian financials. They predicted that the strategic stake sale will keep attrition levels high in the banking industry while maintaining Fairfax’s dynamic competitive position. The Ministry of Finance said the lender will generate funds without dependence on government assistance post‑privatisation, infuse private capital, introduce new technology and better management practices, and enhance its business potential for credit and deposit growth. The transaction is the largest FDI in the financial sector so far, expected to generate positive sentiment for economic reforms and improve the investment climate.