Fairfax Moves Closer to $5 Billion IDBI Bank Deal as India Weighs Two-Year Consolidation Window

Canada’s Fairfax Financial is moving closer to acquiring a majority stake in IDBI Bank, with India reportedly considering giving the investor up to two years to consolidate its existing banking interests before completing the transaction.

The proposed deal is valued at more than $5 billion and could become the largest foreign investment in an Indian bank. The sale would involve a majority stake held by the Government of India and the Life Insurance Corporation of India (LIC).

The main issue is Fairfax’s existing investment in CSB Bank. Fairfax owns around 40% of the Kerala-based private sector lender. Reserve Bank of India rules restrict an entity from owning and operating two separate banks, meaning Fairfax would need to restructure its existing banking interests if it takes control of IDBI Bank.

Two options are reportedly being considered. Fairfax could sell its entire stake in CSB Bank or merge CSB Bank with IDBI Bank. Sources cited by Reuters said Fairfax may prefer selling its CSB holding because a merger could create complications, including labour-related issues. Discussions are still at an early stage, and the final route has not been decided.

The proposed two-year period would give Fairfax more time to resolve this ownership issue instead of having to complete the restructuring immediately alongside the IDBI Bank acquisition.

The IDBI Bank disinvestment process has been underway for several years. The Government of India and LIC together hold a 60.72% stake in the bank. The government owns 45.48%, while LIC holds 49.24%, according to details reported when the latest bids were submitted.

The sale process faced delays earlier this year after initial bids did not meet the government’s expectations. In July, India received revised bids from Fairfax Financial and Dubai-based Emirates NBD after the government lowered the reserve price for the transaction. Fairfax subsequently emerged as the leading contender.

The proposed transaction has already cleared a panel of senior government officials and is now awaiting consideration by a committee of ministers. If approved, the deal would still require regulatory clearances from the RBI and SEBI.

For the Indian banking sector, the transaction would mark another major step in attracting foreign capital into private and formerly state-controlled financial institutions. It would also give Fairfax a significantly larger presence in India’s banking market.

Fairfax has already built a substantial Indian portfolio. Through Fairfax India Holdings Corporation, the group has investments in financial services companies including CSB Bank, IIFL Capital and 5paisa. Fairfax India Holdings had assets of about $3.8 billion as of June 30, 2026, according to Reuters.

IDBI Bank has assets of nearly $42 billion, making the proposed acquisition considerably larger than Fairfax’s existing banking exposure in India. CSB Bank, meanwhile, had business worth about ₹86,282 crore.

The deal is not complete yet. Final government approval and regulatory clearances remain pending, while Fairfax and Indian authorities continue to work through the conditions attached to the proposed acquisition.