New Delhi [India], October 14 (ANI): Union Finance Minister Nirmala Sitharaman hailed the Cabinet Committee on Economic Affairs' (CCEA) approval of IDBI Bank's strategic restructuring, saying the move would enable the bank's next phase of growth through foreign direct investment (FDI) while retaining a minority stake and strengthening India's banking ecosystem.

The Union Cabinet on Wednesday approved the sale of a controlling 60.72 per cent stake in IDBI Bank to Canada's Fairfax Financial Holdings for Rs 52,878 crore, following which Life Insurance Corporation of India's (LIC) shareholding will fall to 19 per cent.

"India's reform trajectory reaches another milestone today with the CCEA's approval of IDBI Bank's strategic restructuring. Having supported the bank's recovery, we are now enabling its next phase of growth through the infusion of Foreign Direct Investment while retaining a minority stake. This will not only strengthen the banking ecosystem but also help banking services surpass global benchmarks. It reinforces that India's growth story is strong, its economy is resilient, and the government's commitment to reform is unwavering," FM Sitharaman said in the post. 

https://x.com/nsitharaman/status/2110338164640637434?s=20

Union Minister Ashwini Vaishnaw said the restructuring would help attract foreign investment into India's financial sector and create fresh growth opportunities for small businesses and entrepreneurs.

'A major decision has been taken regarding the financial sector, specifically concerning IDBI, an institution crucial for the growth of our MSMEs and new industries.  A decision has been made to undertake the strategic restructuring of IDBI,' Vaishnaw said during the Cabinet briefing. 

The government will divest a 30.48 per cent stake in IDBI Bank, while Life Insurance Corporation of India (LIC) will sell 30.24 per cent. Following the transaction, the government and LIC will retain stakes of 15 per cent and 19 per cent, respectively, taking their combined shareholding to 34 per cent.

"With an unshakable resolve toward economic transformation, we are shaping a future-ready financial sector dedicated to empowering customers, backing entrepreneurs, and fuelling the vision of a Viksit Bharat," the post read. 

The restructuring follows a significant improvement in IDBI Bank's financial health, with gross non-performing assets (GNPAs) declining from 31.78 per cent in September 2018 to 2.32 per cent in March 2026. Net non-performing assets (NNPAs) also fell sharply from 17.30 per cent to 0.15 per cent during the same period, while the bank posted a net profit of Rs 9,513 crore in FY26.

The Reserve Bank of India (RBI) had placed IDBI Bank under its Prompt Corrective Action (PCA) framework in May 2017 due to its deteriorating financial condition. The restrictions were lifted in March 2021 following improvements in the lender's financial performance. (ANI)