New Delhi: Shares of IDBI Bank surged nearly 9 percent on Wednesday after the Union Cabinet approved the sale of a 60.72 percent stake in the lender to Fairfax Financial Holdings for Rs 52,878 crore, marking a major step in the government's strategic disinvestment programme and opening a new chapter in the privatisation of state-controlled banks.
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The Cabinet Committee on Economic Affairs (CCEA), chaired by Prime Minister Narendra Modi, approved the strategic restructuring of the bank. The proposed transaction will transfer control of IDBI Bank to Fairfax, subject to the completion of the sale and requisite regulatory approvals.
Finance Minister Nirmala Sitharaman said the decision would help attract foreign direct investment (FDI), strengthen India's banking ecosystem and enable banking services to meet global benchmarks.
In a post on X, Sitharaman said the government had supported IDBI Bank's recovery and was now facilitating its next phase of growth through the proposed restructuring. She added that the move reflected the resilience of the Indian economy and the government's continued commitment to reforms.
According to the government, the transaction, once completed, will be the largest FDI in India's financial sector so far. It also marks the culmination of a disinvestment process that has continued for more than five years.
The government and Life Insurance Corporation of India (LIC) will together retain a 34% stake in the restructured entity, Information and Broadcasting Minister Ashwini Vaishnaw said while briefing the media on the Cabinet decision.
The government sees the restructuring as part of its broader efforts to reduce ownership of state-controlled assets, attract private capital and build a future-ready financial sector that supports customers, entrepreneurs and the vision of Viksit Bharat.
The market responded positively to the announcement. IDBI Bank shares rose 9.07% to close at Rs 90.44 on the BSE, after touching an intraday high of Rs 93.62, up 12.90%. On the NSE, the stock gained 8.98% to settle at Rs 90.39.
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The rally added Rs 8,085.82 crore to the bank's market capitalisation, taking it to Rs 97,244.73 crore.
The gains came despite a decline in the broader equity market. The BSE Sensex fell 251.89 points, or 0.34%, to close at 72,781.89, while the NSE Nifty declined 99.25 points, or 0.44%, to settle at 22,622.70.
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