Fairfax faces 26% voting cap if IDBI Bank sale goes through

Fairfax-backed Canada Inc can acquire 60.72% of IDBI Bank, but it cannot cast votes on more than 26%. DIPAM Secretary Arunish Chawla said on Wednesday that the buyer must reduce its stake to 26% within 15 years, under Reserve Bank of India rules for bank promoters. The limit separates the size of the buyer’s stake from its voting power.¹

The cap comes after the Cabinet approved the sale of a combined 60.72% stake for about ₹52,878 crore. The government is selling 30.48% and Life Insurance Corporation of India, or LIC, 30.24%. Canada Inc, a subsidiary of Fairfax Financial Holdings, is the chosen buyer, but the deal is not complete. It must meet regulatory conditions, and the share purchase agreement is expected before the end of 2026.^1,16 The government and LIC would retain 15% and 19%, respectively.¹⁰

The 26% ceiling reflects a broader rule for private banks: a promoter must gradually reduce its stake to that level within 15 years. That means Fairfax would take control of the lender while facing limits on voting power and a long path to reduce its stake. LIC also faces a separate reduction: Chawla said it must cut its holding to 15% within two years, citing LIC’s housing finance business. After the sale, LIC is expected to hold 19%.¹ That reduction lies ahead. The deal follows years of state support for a bank. The RBI once restricted the bank after losses and bad loans.^10,11

Those rules must still be met before the ownership change is final. Canada Inc must show its credentials to the RBI for a fit-and-proper review. The sale agreement is expected to be signed and completed before the end of 2026.^15,16 The approval opens a path to private management, but it does not give Fairfax unrestricted voting power. The 26% cap and required stake cuts will shape what the new owner and LIC can do next.¹