Money & Banking

IDBI Bank: Ministry issues advisory to central, state governments on grant of business

Our Bureau Mumbai | Updated on December 18, 2019 Published on December 18, 2019

Central and State governments, their departments, agencies and institutions can continue to consider IDBI Bank for grant of government business, according to the Finance Ministry.

This advisory comes in the wake of many of these entities either withdrawing their funds/deposits from IDBI Bank or not inviting the bank to offer bids for deposits or expressing inability to continue granting government business after IDBI Bank became a subsidiary of the Life Insurance Corporation of India (LIC) in January 2019.

The bank has been categorised by the RBI as a private sector bank for regulatory purposes with effect from January 21, 2019. The Ministry has an embargo on further authorisation of government business to private sector banks.

LIC now owns 51 per cent stake in IDBI Bank. The Ministry underscored that LIC is a wholly-owned Government of India entity. LIC and the government together hold 97.46 per cent stake in IDBI Bank.

During FY19, LIC increased its stake in IDBI Bank in four tranches from 10.82 per cent to 14.90 per cent via preferential allotment of shares on October 4, 2018; to 44.31 per cent via preferential allotment of shares on December 28, 2018; and finally to 51 per cent through a mix of open offer purchase on January 18, 2019 and preferential allotment of shares on January 21, 2019.

LIC has invested ₹21,624 crore to increase it stake in the Bank to 51 per cent.

Published on December 18, 2019
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