Fairfax, the Canadian investment holding company, has reportedly improved its offer for IDBI Bank, in which the Centre and LIC are likely to partially divest their holdings in the event of the Narendra Modi-government coming back to power for a third term.

A media report on Monday said the Prem Watsa-led entity has submitted a fresh proposal to the Centre that includes an all-cash deal.

Watsa has also conveyed that Fairfax will preserve the identity of the bank after the proposed acquisition.

Most of the other bidders have so far not stayed away from coming up with an all-cash deal, which may swing the tide in favour of Watsa.

In its earlier proposal, Fairfax had suggested that IDBI Bank will be kept as a separate entity for a few years after which it will be merged with CSB Bank.

The revised pitch was submitted to the central government around a fortnight ago.

According to the revised terms, Fairfax India Holding, the domestic arm of the Canadian firm, will submit a bid for IDBI Bank.

Shares of the lender on Monday ended lower at Rs 82.65 on the BSE, a drop of 1.74 per cent over the last close,

The Department of Investment and Public Asset Management (Dipam), which manages government holding in state-owned enterprises, had in October 2022 invited bids for selling a 30.48 per cent stake in IDBI Bank, along with a 30.24 per cent stake in Life Insurance Corporation.

The government (45.48 per cent) and LIC (49.24 per cent) jointly hold 94.72 per cent stake in the private sector bank, which will come down to 34 per cent following the strategic sale.

With the new government set to take charge only in June this year, the strategic sale could be completed only in the second half of 2024-25.

Earlier, Dipam said the potential buyers should have a minimum net worth of Rs 22,500 crore and must have reported a net profit in three out of the last five years to qualify to bid for the bank.

Fairfax India recently offered a $200 million (about Rs 1,650 crore) liquidity support to IIFL Finance, in which it has a 15 per cent stake. This came after the RBI restricted the non-bank lender from disbursing gold loans.

Fairfax India said that the RBI's embargo had raised liquidity concerns.