Banking
Fairfax's 60.72% IDBI Bank Stake: RBI Ownership Rules
15 October 2026 · www.business-standard.com
Canada's Fairfax Financial Holdings will acquire a 60.72% stake in IDBI Bank for ₹52,878 crore, with CCEA approval granted on Wednesday. The deal must comply with RBI's foreign ownership norms, including a requirement to reduce equity to 26% within 15 years.
Points to Remember
- Fairfax is set to acquire 60.72% of IDBI Bank for ₹52,878 crore; CCEA approved the deal on Wednesday.
- FDI in private sector banks is allowed up to 49% via automatic route, beyond 49% and up to 74% requires government approval; public sector banks have a 20% cap.
- IDBI Bank is treated as a private sector bank for this deal, following RBI reclassification after LIC's 2019 acquisition.
- RBI's January 2023 Master Direction and Section 12B of the Banking Regulation Act, 1949, govern major shareholder approvals, focusing on fit-and-proper criteria.
- Fairfax must reduce its equity holding to 26% within 15 years under promoter ownership rules; government and LIC are expected to retain 15% and 19% stakes respectively, and will withdraw board nominees.
Why it matters
This clarifies the regulatory limits for foreign investment in private banks, which is useful for understanding ownership and control rules in banking exams. It also highlights how large deals are structured under RBI's framework.
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