The Union Cabinet has approved the strategic restructuring of IDBI Bank, with the government and Life Insurance Corporation of India (LIC) set to divest a combined 60.72% stake in the lender to Canada Inc, whose parent entity is Fairfax Financial Holdings.

According to the Department of Investment and Public Asset Management (DIPAM), the government will divest a 30.48% stake in IDBI Bank, while LIC will sell 30.24%.

Following the restructuring, the government and LIC will together retain a 34% stake in the restructured entity, Vaishnaw said.

The strategic buyer, Canada Inc, has been approved as the purchaser of the stake. Under the share purchase agreement, the invested capital will remain locked in for three years, and IDBI Bank will retain its existing brand name.

" We need organisations that can meet growth capital for entrepreneurs," Union Minister Ashwini Vaishnaw said while announcing the decision.

LIC will have to reduce its stake in IDBI Bank to 15% within two years, in line with Reserve Bank of India (RBI) norms.

The share purchase agreement is expected to be signed and executed before the end of the current calendar year, the DIPAM secretary said.

The benchmark price used to evaluate qualified bids was Rs 75.99 per share, and the winning bid was higher than the benchmark price, the DIPAM secretary added.

" We need organisations that can meet growth capital for entrepreneurs," Union Minister Ashwini Vaishnaw said while announcing the decision.