By: The Obnews Editorial Team
India has approved a proposal by Canadian investor Prem Watsa’s Fairfax Financial Holdings to acquire a controlling stake in IDBI Bank for approximately US$5.6 billion, marking a significant development in Canada–India business relations. India’s Finance Ministry says the transaction, once completed, would represent the largest foreign direct investment in the country’s financial sector. Regulatory requirements remain outstanding before the ownership transfer can be completed.
The October 14 approval names Fairfax-backed 10955230 Canada Inc. as the strategic buyer of a 60.72 per cent stake in the lender. The purchase consideration is ₹52,878.08 crore, approximately ₹528.78 billion, for shares being sold by the Government of India and Life Insurance Corporation of India. The transaction implies a valuation of approximately ₹871 billion for the entire bank.
Following the sale, the Indian government would retain 15 per cent of IDBI, while LIC would hold 19 per cent. Although their combined ownership would remain substantial, both institutions would withdraw their nominees from the bank’s board and become public shareholders, according to the government’s official explanation. That arrangement would transfer management control to the incoming private investor.
Fairfax’s approved offer of ₹81 per share exceeds the government’s independent valuation benchmark of ₹75.99. Officials said they relied on market-comparison and asset-valuation methods after determining that IDBI’s volatile, narrowly traded share price was an unreliable guide to its underlying value. The winning offer was above both independent valuation estimates.
The decision advances a sale process that has stretched across several years. IDBI was placed under the Reserve Bank of India’s Prompt Corrective Action framework in 2017 because of financial difficulties, with restrictions subsequently lifted in 2021. The strategic sale later encountered repeated delays, including a setback in March 2026 when initial bids fell below the government’s reserve price. Revised bidding ultimately brought the transaction back on track.
IDBI’s regulatory classification also requires a distinction from its ownership. The RBI has classified it as a private-sector bank since January 21, 2019, following LIC’s acquisition of a controlling stake. The Fairfax transaction would therefore change who controls the institution, rather than introduce its first private-sector regulatory designation.
The bank enters this proposed transition with stronger loan quality and expanding business. For the quarter ended June 30, 2026, IDBI reported net profit of ₹2,115 crore, approximately five per cent higher than a year earlier, while net advances increased 22 per cent and deposits grew 10 per cent. Its gross non-performing loan ratio improved to 2.30 per cent from 2.93 per cent. Nevertheless, operating profit declined and net interest margin narrowed, indicating that sustaining growth and improving profitability will remain priorities under new ownership.
For Canadian readers, Watsa’s personal history adds another dimension to the acquisition. Born in Hyderabad, he moved to Canada in 1972, earned an MBA at Western University’s Ivey Business School and founded Fairfax in 1985. His career has connected Canadian financial markets with international investment opportunities, making the proposed IDBI acquisition a prominent example of the business relationships built by the Indian diaspora.
Fairfax’s wider investment network already has considerable experience in India. Fairfax India Holdings, a separately listed company within the group, has investments spanning Bangalore International Airport, CSB Bank, IIFL Finance, IIFL Capital, shipping and industrial businesses. The proposed IDBI purchase would substantially expand the group’s involvement in Indian banking, building on an established presence across the country’s economy.
The announcement comes during a particularly active week for Canada–India commercial engagement. International Trade Minister Maninder Sidhu is leading nearly 300 delegates to India from October 12 to 17, with stops in Mumbai and Bengaluru. Global Affairs Canada describes the mission as the largest Canadian trade delegation to India in more than three decades, involving sectors including aerospace, clean technology, information technology, life sciences and agri-food.
Prime Minister Mark Carney and Indian Prime Minister Narendra Modi also spoke on October 13, welcoming increased engagement and reaffirming their commitment to advance negotiations on a Comprehensive Economic Partnership Agreement. Their discussion included efforts to double bilateral trade by 2030 and preparations for Modi’s anticipated visit to Canada in December. Fairfax’s investment decision has its own lengthy commercial history, but its approval coincides with this broader effort to strengthen relations between the two countries.
An outstanding question concerns Fairfax’s existing interest in CSB Bank. Reporting on the transaction indicates that Fairfax is expected to address its approximately 40 per cent holding through a sale or a merger with IDBI, with a two-year period reported for resolving the overlap. A merger has not been confirmed as the chosen outcome, and the eventual structure remains subject to regulatory requirements.
The purchase payment itself would go to the government and LIC for their existing shares, while any subsequent capital investment in IDBI would be a separate step. India’s Finance Ministry expects private ownership to bring improved technology, management practices and access to capital, supporting the bank’s ability to compete for deposits and lending business. Fairfax must now present its credentials and a roadmap for meeting the RBI’s regulatory conditions as the transaction moves toward completion.