Mumbai, Oct. 15 -- The government's decision to sell a 60.72% stake in IDBI Bank to Canada's Fairfax Financial Holdings for Rs.52,878 crore sends a strong signal that India is open to foreign investment and reflects a renewed willingness to reduce the state's ownership footprint in banking and give private capital a larger role in the sector, analysts said.

Over the past 12-18 months, the government and the Reserve Bank of India (RBI) have permitted global banks and strategic investors to acquire significant stakes in Indian banks.

The stake sale comes after three-and-a-half years of hectic dealmaking, with potential buyers such as Dubai-based Emirates NBD also in the fray. In a transaction that was run by the department of investment a...