Following the completion of the acquisition of 51 per cent controlling stake by the Life Insurance Corporation of India (LIC) in IDBI Bank, the life insurance behemoth will have five representatives on the bank's board, while the government will have two.

Further, to ensure continuity at the top, LIC will persist with the bank's present top management till such time as the latter's board approves appointment of a new MD & CEO and DMDs on the board after following the due process.

According to IDBI Bank's Articles of Association, which has come into effect on January 21, 2019, the bank's new board will comprise: Chairman of LIC (as an ex-officio Non Executive Non Whole-time Chairman of IDBI Bank); a whole-time Managing Director & CEO nominated by LIC; two whole-time Deputy Managing Directors (DMDs) nominated by LIC; an Official nominee Director of LIC; two nominee Directors of the Government of India; and eight non-rotational independent Directors appointed by shareholders in the general meeting.

The Managing Director & CEO and the whole-time directors will hold office for such term not exceeding five years as LIC may specify in this behalf and any person so appointed will be eligible for reappointment, subject to such regulatory approval as may be required under the Companies Act, Banking Regulation Act or any other act in force.

Meanwhile, in terms of LIC's letter dated January 18, 2019, the board of IDBI Bank on Monday approved the continuation of office of Rakesh Sharma, K. P. Nair and G. M. Yadwadkar as Directors and as MD & CEO and DMDs respectively of IDBI Bank till such time as the board approves appointment of a new MD & CEO and DMDs on the board of IDBI Bank after following the due process.

Further, IDBI Bank's board also approved the appointment of Rajesh Kandwal, Director and CEO of LICHFL Care Homes Ltd, as an Additional Director and LIC's Nominee Director on the board of the Bank.

LIC completes acquisition of 51% in IDBI Bank

IDBI Bank, in a statement, said LIC completed acquisition of 51 per cent controlling stake in the bank on Monday, making it the majority shareholder.

The deal, conceptualised in June 2018, is envisaged as a win-win situation for both the bank and LIC, with an opportunity to create enormous value for shareholders, customers and employees of both entities through mutual synergies.

"The transaction promises a paradigm shift for both partners, creating for the first time a unique financial conglomerate in India....With this deal, LIC will have a strategic investment in a large bancassurance channel, thereby, increasing its productivity and reducing distribution costs," the statement said. Over 1,800 branches of IDBI Bank can be used as touch-points for selling LIC policies.

More than 900 of the bank's branches are also proposed to be enabled for settlement payments via NEFT (National Electronic Funds Transfer). The bank will extend its cash management facility to LIC, which will help boost its current account balances and reduce its cost of funds.

"IDBI Bank will get access to a wide network of over 1 lakh employees and 11 lakh agents of LIC. In addition, LIC employees and agents will get access to preferential and value-added banking services....IDBI Bank and LIC have started working to ensure full realisation of their synergies over the next 12 months.

"Improved financial health will pave the way for the bank to exit from PCA in a time-bound manner and be a future-ready, top ranked bank," said the statement.

ramkumar.k@thehindu.co.in

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