• search

LIC board approves acquiring majority stake in IDBI Bank

By Deepika
Subscribe to Oneindia News
For Quick Alerts
ALLOW NOTIFICATIONS
For Daily Alerts

    New Delhi, July 16: The board of Life Insurance of India (LIC) on Monday gave the approval for acquiring up to 51% stake in IDBI Bank.

    Representational Image

    The life insurer has around 7.5% stake in LIC at present and will acquire the remaining stake from the government, Subhash Chandra Garg, Secretary, Department of Economic Affairs said, adding that in most probability IDBI Bank will issue preference shares to LIC to complete the deal.

    Using this route rather than LIC directly buying the government's stake in IDBI Bank will ensure that the bank receives the capital, Garg added.

    He added that an open offer may not be required as the public shareholding in IDBI Bank is very small at 5%. "LIC will go through the process and make the open offer if necessary, but it is not very material." He said the pricing of the deal will depend on the formula of the preference share issuance.

    When asked if the deal will require the government's nod, Garg said the deal will require the nod of the government.

    The government has a 85.96% stake in IDBI Bank.

    LIC's stake buy will help the debt-ridden state-owned bank get a capital support of Rs 10,000- 13,000 crore.

    Now the state-owned LIC will approach markets regulator SEBI.

    Insurance regulator IRDAI has already given its approval to the insurer for the stake purchase.

    LIC's stake buy will help the debt-ridden state-owned bank get a capital support of Rs 10,000- 13,000 crore.

    LIC has been looking to enter the banking space by acquiring a majority stake in IDBI Bank as the deal is expected to provide business synergies despite the lender's stressed balance sheet.

    It will get about 2,000 branches through which it can sell its products, while the bank would get massive funds of LIC. The bank would also get accounts of about 22 crore policy holders and subsequent flow of fund.

    Once the deal goes through, IDBI Bank, which is grappling with mounting loans and gross non-performing assets rising to a staggering ₹55,600 crore at the end of the March quarter, will get much needed capital support to revive its fortune.

    For Breaking News from Oneindia
    Get instant news updates throughout the day.

    X
    We use cookies to ensure that we give you the best experience on our website. This includes cookies from third party social media websites and ad networks. Such third party cookies may track your use on Oneindia sites for better rendering. Our partners use cookies to ensure we show you advertising that is relevant to you. If you continue without changing your settings, we'll assume that you are happy to receive all cookies on Oneindia website. However, you can change your cookie settings at any time. Learn more