Canada-based Fairfax Financial Holdings Ltd. has won in-principle approval from India's central bank to acquire a 51% stake in Catholic Syrian Bank Ltd., Mint reported Dec. 30, citing two people aware of the development.
The Reserve Bank of India's approval requires Fairfax Financial to reduce its stake in the Indian bank to 15% over a period of 12 years. Further, the Canadian company is not allowed to sell its shares in the bank in the first five years, the people told the publication.
The central bank, however, has not said anything about Fairfax Financial's voting rights in the bank, one of the people said. The RBI's rules cap voting rights in a private sector bank at 15%, irrespective of the shareholding.
An independent appraiser will determine the value of the 51% stake in Catholic Syrian Bank, the person added. Earlier in December, S. Santhanakrishnan, outgoing chairman of the bank, had said Fairfax Financial was looking to invest 10 billion rupees in the bank.
As of Dec. 29, US$1 was equivalent to 67.97 Indian rupees.