IDBI Bank's rating on watch positive as Fairfax deal awaits approvals

Credit rating
Banks

Blacklitt Research24 October 20263 min read

IDBI Bank (NSE: IDBI) had its long-term debt instruments placed on 'Crisil AA/Watch Positive' by CRISIL Ratings, while its certificate of deposit programme was reaffirmed at 'Crisil A1+', it said in a filing on 24 Oct 2026. The action follows the proposed acquisition of a 60.72% stake by Fairfax Financial Holdings Limited.

Key highlights

Long-term debt rating: Crisil AA/Watch Positive, placed on rating watch
Certificate of deposit programme: Crisil A1+, reaffirmed
Proposed stake sale: 60.72% at Rs 81 per share, around ₹52,878 crore
Post-deal holding: GoI around 15%, LIC around 19%

The rating action in numbers

Item	Detail
Long-term debt instruments	Crisil AA/Watch Positive (Rating Watch with Positive Implications)
Certificate of deposit programme	Crisil A1+, reaffirmed; ₹40,000 crore programme outstanding
Report date	23 Oct 2026
Stake to be acquired by Fairfax	60.72%, from GoI (30.48%) and LIC (30.24%)
Price and consideration	₹81 per share; around ₹52,878 crore in aggregate
Withdrawn	Ratings on ₹5 crore of Omni Bonds, on redemption

What the watch placement depends on

CRISIL Ratings says the rating watch will be resolved once all requisite regulatory approvals are in place and greater clarity emerges on Fairfax's support stance, commitment and strategic importance. The agency says the successful consummation of the transaction remains subject to requisite approvals.

The agency also notes that Fairfax has been guided by the regulator to gradually reduce its shareholding to 40% within 10 years and to 26% within 15 years after the acquisition.

Capital, asset quality and liquidity at the bank

CRISIL Ratings states that the bank's Tier-I capital adequacy ratio was 26.6% and its overall CAR 27.1% as on 30 Sep 2026, with networth of ₹71,551 crore. Gross NPA was 2.1% and net NPA 0.2%, and the liquidity coverage ratio was 123.43%.

The agency lists the factors that could move the rating. Upward factors include sustained ROA above 2.0% on a steady-state basis and benefits from Fairfax's majority ownership. A downward factor is deterioration in asset quality, with net NPA rising above 5%.

Insurance businesses proposed for transfer

Fairfax proposes to contribute its interests in Go Digit General Insurance Limited, Go Digit Life Insurance Limited and IIFL Capital Services Limited to the bank, at their respective market prices, subject to regulatory approvals. CRISIL Ratings says the acquisition has the potential to further strengthen the bank's business profile.

What the rating action means for IDBI Bank's shareholders

The filing sets out a proposed change of control: after completion, Fairfax would become the majority shareholder, and the holdings of GoI and LIC would fall to around 15% and 19%. The rating action does not change the bank's ratings today; it places them on watch.

The filing does not say when the regulatory approvals will come, when the stake acquisition will complete, or what the rating outcome will be once the watch is resolved. The effect on the bank's own financial results is also not stated.

Reference: Original filing (PDF)

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