Money & Banking

LIC board approves acquisition of up to 51% stake in IDBI Bank

Surabhi Mumbai | Updated on July 16, 2018

The board of Life Insurance Corporation of India on Monday approved the acquisition of up to 51 per cent stake in debt-ridden IDBI Bank.

Economic Affairs Secretary Subhash Chandra Garg said this would most probably take place through preferential shares.

LIC will now approach market regulator SEBI for approval as well as clearance from the Reserve Bank of India and the Union Cabinet. It has already received approval from insurance regulator IRDA.

Following the acquisition, LIC is also likely to nominate directors on the board of the bank

PTI adds: LIC's stake buy will help the state-owned bank get 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 funds.

IDBI Bank is grappling with mounting toxic loans, with gross non-performing assets rising to a staggering Rs 55,600 crore at the end of the March quarter.

Published on July 16, 2018

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