New Delhi, Oct. 14 -- The central government on Wednesday approved the long-pending deal to privatise IDBI Bank and reduce state ownership of the commercial lender, with Canada's Fairfax Financial Holdings set to acquire a 60.72% stake in the bank for about Rs.53,000 crore ($5.5 billion). The deal, the largest in the banking sector, was described by the Union Cabinet as the 'strategic restructuring' of IDBI Bank.

The government's stake in the bank will fall from 45.5% to 15%, while Life Insurance Corporation of India's (LIC) holding will decline from 49.2% to 19%.

Under the terms of the deal approved by the Union Cabinet, both existing co-promoters will entirely withdraw their nominee directors from the bank's board of directors.

IDBI ...