IDBI Bank's stock price fell by more than 7% on Thursday. Previously, the Indian government announced the sale of a controlling stake in this state-owned bank to the Canadian company Fairfax Financial Holdings, with the transaction amount exceeding 529 billion rupees (5.5 billion US dollars).

The Indian Ministry of Finance stated in a statement on Wednesday that once the final approval is obtained, this transaction will become the largest foreign direct investment deal in India's financial sector.

The Ministry of Finance stated: "Due to poor financial conditions, [ IDBI ] Bank requires repeated capital injections." The Ministry also mentioned that after a brief recovery, the government decided to sell 60.7% of the bank's shares to a "strategic buyer."

According to the government statement, during the bidding process, the government determined that the average fair value of IDBI shares was 75.99 rupees per share. The winning bid for Fairfax was 81 rupees per share.

The stock price of IDBI closed at 90.39 rupees on Wednesday, which is higher than the winning bid price of Fairfax. Fairfax still needs to submit qualification documents to India's banking regulatory authority, the Reserve Bank of India, in order to undergo an assessment of being "qualified and appropriate".

Indian Finance Minister Nirmala Sitharaman stated on the X platform on Wednesday: "After supporting the bank's recovery, we are now promoting its next phase of growth by introducing foreign direct investment, while retaining a minority stake."

She also stated that the investment in Fairfax once again proves that "India's growth story remains strong, the economy is resilient, and the government's commitment to advancing reforms is unwavering."

Earlier this year, the Indian government sold shares in several companies, including Cochin Shipyard, Indian Railways Finance Corp, NHPC, and Coal India. In August of this year, the government raised $3.3 billion by selling 6.5% of shares in India Life Insurance Company (the largest life insurance company in the country), Life Insurance Corporation of India.

Since the beginning of this year, as fiscal pressures have intensified, the Indian government has been reducing its holdings in several state-owned enterprises in order to maintain the country's economic growth momentum.