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Fairfax may get 2 years to merge or sell CSB Bank for IDBI deal
Fairfax may get two years to sell or merge its CSB Bank stake to clear RBI rules for the IDBI Bank acquisition, sources said.
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Canada's Fairfax Financial, a frontrunner to acquire the government's majority stake in IDBI Bank, is likely to get up to two years to consolidate its India bank holdings, two sources familiar with the matter said. The transaction, valued at more than $5 billion, would be the largest foreign investment in an Indian bank.
Under Reserve Bank of India rules, an entity cannot own and operate two separate banks. Fairfax owns about 40 percent of smaller lender CSB Bank. The Canadian investor is likely to be given up to two years to either sell its CSB stake or merge it with IDBI Bank, the two sources said.
A third source, a government official, said it would be "speculative" to say Fairfax will be given two years. Fairfax, the Finance Ministry and the RBI did not respond to requests for comment.
The deal has been cleared by a panel of senior bureaucrats and is now before a committee of ministers for final approval, the sources said. It would then require regulatory clearances from the RBI and the Securities and Exchange Board of India.
One option to comply with RBI regulations would be to merge CSB Bank with IDBI Bank, the sources said. Fairfax's India entity is also exploring a sale of its entire CSB stake, according to one of the sources.