The Canadian investor is among the leading contenders for a controlling stake in IDBI Bank. Under the RBI rules described in the report, a company cannot simultaneously own and operate two separate banks. Sources say the government may allow Fairfax time to sell its CSB holding or combine the lenders.

The proposed disposal of shares held by the government and LIC is worth more than $5 billion, or approximately ₹42,000 crore. If completed, the transaction would represent the biggest foreign investment yet in an Indian bank. The government wants the sale to help strengthen its finances.

Fairfax gained control of Kerala-based CSB Bank in 2018, when the lender was under financial strain and needed capital. A merger with IDBI is one option; selling its entire CSB stake is another. Some sources indicate that Fairfax may favour an exit because a merger could bring union and employee-related complications.

A senior-official panel has cleared the transaction, according to the report, but approval from a ministerial committee remains pending. RBI and SEBI clearance would also be required. Neither the Finance Ministry nor the RBI has officially commented, so the possible two-year window should not be treated as a confirmed concession.