Fairfax Financial plans to merge Digit, IIFL Capital with IDBI Bank

Watsa said the proposed entity would create a leading Indian bank with an integrated offering. According to sources, the transaction — a major step in the long-delayed strategic sale of the lender — is expected to close in three to four months.

Fairfax holds a more than 27 per cent stake in IIFL Capital Services, formerly IIFL Securities.

IIFL Capital Services is a wealth management and investment banking firm. Similarly, the Canadian group holds around 57 per cent in Go Digit Life Insurance and Go Digit General Insurance, collectively referred to as Digit, which operates insurance businesses.

“We are committed to building the world’s finest financial institution from India,” Watsa said in a statement issued by Fairfax Financial Holdings and Fairfax India Holdings Corporation.

Combining IDBI Bank, Digit, and IIFL Capital would create an entity that is well-positioned to participate in the continued growth and success of Indian markets, he added.

Fairfax plans to contribute its interests in Digit, along with Fairfax India’s 30.2 per cent stake in IIFL Capital Services, to IDBI Bank. The contributions would be valued at the respective market prices of the businesses, in accordance with applicable laws and regulations.

The proposed structure would allow IDBI Bank to offer insurance products through Digit and investment banking, institutional equities, wealth management and asset management services through IIFL Capital, alongside its existing banking operations. Fairfax sees considerable scope for growth in India’s bank deposits, credit and wealth management markets.

“We believe that a unified financial services company that can offer a one-stop solution for the financial needs of Indians will be of significant benefit to India and its economy,” Watsa said.

The proposed acquisition and contributions remain conditional. Fairfax said no binding definitive agreements had been entered into as of its announcement. The transactions would require approvals from the Reserve Bank of India, the Securities and Exchange Board of India, and other relevant authorities. The proposed contribution of Digit would also require approval from the Insurance Regulatory and Development Authority of India.

Fairfax expects IDBI Bank’s managing director and CEO, Rakesh Sharma, to continue leading the combined entity after completion of the proposed transactions. Sharma was appointed IDBI Bank’s chief executive in October 2018, and his term was extended by three years last year.

N S Kannan, former managing director and CEO of ICICI Prudential Life Insurance and former chief financial officer of ICICI Bank, is proposed to become chairman. Both appointments would be subject to RBI approval.

Fairfax also plans to include C V R Rajendran, former CEO of CSB Bank, in the leadership group. Under Rajendran, Fairfax acquired a 51 per cent stake in the private sector lender, then known as Catholic Syrian Bank, in 2018 for ₹1,200 crore.

Interestingly, Watsa’s statement did not mention CSB Bank, in which Fairfax now holds a 40 per cent stake. Fairfax has two years to decide whether to merge CSB Bank with IDBI Bank or exit its investment in the smaller lender.

Fairfax does not expect the proposed contributions to change the governance, management or operating structure of Digit or IIFL Capital. Digit’s leadership team, led by founder and Chairman Kamesh Goyal, would continue to oversee its strategy and execution. IIFL Capital’s management team, led by R Venkataraman, Vasudev Jagannath and Nemkumar H, would continue to run its capital markets businesses.

Goyal said combining Digit with IDBI Bank would strengthen the insurer’s distribution network and support the expansion of its products and services.

Nirmal Jain, founder of IIFL Group, said the proposed partnership would create opportunities for IIFL Capital to accelerate growth in investment banking, institutional equities, wealth management and asset management.

“By combining our capital markets expertise with the scale and customer reach of a leading bank, we can bring a broader range of investment and wealth solutions to millions of customers,” Jain said, citing the limited penetration of wealth and asset management services in India.

The IDBI Bank acquisition would deepen Fairfax’s presence in India’s financial services sector, where it already has interests in insurance and capital markets. The proposed combination would bring these businesses under the umbrella of a bank with an established deposit base and branch network.

Watsa said Fairfax intended to support India’s ambition of becoming a developed economy by 2047 and achieving a gross domestic product of more than $30 trillion. He also highlighted the potential for a successful IDBI Bank to improve India’s credit-to-GDP ratio, a measure of the depth of credit available to the economy.

Fairfax expects to fund the acquisition through a combination of cash on hand, existing credit facilities and potential asset sales.

IDBI Bank shares fell nearly 8 per cent on Thursday to close at ₹83.25 on the BSE. Fairfax’s offer price of ₹81 per share was 10.4 per cent below the stock’s previous close of ₹90.40.

IIFL Capital's assets under management and custody stood at ₹2.30 trillion at the end of March 2026. Its consolidated gross income rose to ₹2,603 crore in Fy26 from ₹2,567 crore in FY25, while net profit fell to ₹561 crore from ₹712 crore.

Go Digit General Insurance’s gross written premium increased to ₹11,294 crore from ₹10,282 crore, while net profit rose to ₹544 crore from ₹425 crore. Go Digit Life Insurance’s gross written premium, including reinsurance inward, grew to ₹1,990 crore from ₹1,316 crore.

 (With inputs from Aathira Varier)