The Indian government has approved the Canadian holding company Fairfax Financial Holdings Limited to take a majority stake in IDBI Bank.

The deal will see a wholly-owned subsidiary of Fairfax take a 60.72 per cent stake in IDBI Bank, at a price of 528.78 billion Indian rupees (approximately US$5.6 billion). It is the largest foreign direct investment ever made in India’s financial sector.

IDBI Bank is currently jointly owned by the Indian government and Mumbai-based Life Insurance Corporation of India (LIC), which respectively hold 45.48 per cent and 49.24 per cent stakes in the firm.

Under the Fairfax deal, the government will sell 30.48 per cent and retain 15 per cent, while LIC will sell 30.24 per cent and retain 19 per cent.

Fairfax said it will transfer its stakes in Indian financial services organisations Digit Insurance and IIFL Capital, in which it holds 49 per cent and 30.2 per cent, under IDBI Bank.

The Kerala-based CSB Bank, in which Fairfax holds a 40 per cent stake, denied knowledge of the deal and said it is not merging with IDBI Bank. In August, Reuters reported that the Indian government has given Fairfax two years to divest from CSB Bank or merge it with IDBI Bank.

The Indian government has expressed an interest in greater foreign investment in its financial sector and under prime minister Narendra Modi has targeted strategic disinvestment in public sector organisations.

Last year, the Indian finance minister Nirmala Sitharaman said that the region needs more big banks and that the government could consolidate state banks to achieve this goal.

Since October 2025, Abu Dhabi's International Holding Company (IHC) has taken a 43.5 per cent stake in Sammaan Capital for $1 billion and the Japanese megabank Mitsubishi UFJ Financial Group (MUFG) announced plans to invest more than $4 billion in NBFC Shriram Finance for approximately 20 per cent of the firm.

In August, Bank of America announced it will acquire a 49.9 per cent stake in the Jio Financial Services subsidiary Jio Credit Limited for 182.68 billion rupees ($1.9 billion).

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