Fairfax Financial of Canada, viewed as a leading contender for the government’s stake in IDBI Bank, may be permitted up to two years to bring its banking holdings in India into line with regulations, Reuters has reported.
The planned disposal of a majority holding in IDBI Bank by the federal government and state insurer Life Insurance Corp of India (LIC) has moved into the final phase after a prolonged process.
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Reuters said the deal is valued at more than $5 bn and would rank as the largest foreign investment in an Indian bank.
Reserve Bank of India (RBI) rules do not allow one entity to own and run two separate banks. Fairfax holds about 40% of CSB Bank, a smaller lender.
Two sources cited by Reuters said the investor could be given as long as two years to either exit that CSB position or combine CSB with IDBI Bank.
A third source, described as a government official, said it would be “speculative” to say that Fairfax will be given two years to consolidate its bank holdings.
IDBI Bank has assets of nearly $42 bn.
The report said that Fairfax could prefer selling its CSB stake, as a merger might face hurdles, including labour union-related matters.
The same source added that CSB’s size is not large enough to materially change the profile of the merged entity.
The report said talks are still at an early stage, and any decision would come only after negotiations with the government conclude.
Fairfax’s India exposure includes Fairfax India Holdings Corporation, which had assets of $3.8 bn as of 30 June 2026.
Other holdings listed in the report include non-bank lender IIFL Capital and online brokerage 5paisa.
Last month, it was reported that India received revised bids from Fairfax Financial and Emirates NBD as the privatisation process reached a critical stage.
India’s government and LIC are moving ahead with plans to sell a combined 60.7% stake in IDBI Bank.
The government holds 45.48% of the lender, while LIC owns 49.24%.
