• 

  IRDAI gives nod to LIC to buy

  stake in IDBI Bank

  The life insurer can raise its stake in the debt-

  ridden public-sector bank to 51%

  MUMBAI, JUNE 29

  Life Insurance Corporation of India is all set to become a knight in shining

  armour for the ailing IDBI Bank. In a first-of-its-kind transaction, the

  Insurance Regulatory and Development Authority of India (IRDAI) has

  approved a proposal allowing the former to acquire a majority stake in the

  bank.

  The approval, which allows for a one-time exemption to LIC to step up its

  stake in IDBI Bank, was taken at the meeting of the IRDAI board on

  Friday.

  ₹13,000-cr investment

  Under the proposal, the public-sector life insurance behemoth can raise its

  stake in the public-sector bank to 51 per cent, injecting ₹10,000-13,000

  crore in the debt-ridden lender, sources said.

  The acquisition, however, will be seen only as an investment and LIC will

  gradually lower its stake in the lender.

  According to market players, in 2013, LIC had upped its stake in state-

  owned Corporation Bank to 28 per cent from about 12 per cent.
• 

  Subsequently, the life insurer pared its stake (to 13.03 per cent as at

  March-end 2018) in the public sector bank.

  At present, LIC owns a 10.82 per cent stake in IDBI Bank and it will be

  expected to bring down its holding to the mandated 15 per cent over the

  next few years. The transaction, which is being seen as an attempt by the

  government to revive the ailing bank, is still subject to approvals from

  market regulator SEBI and the Reserve Bank of India.

  More approvals awaited

  Given the size and the nature of the transaction, sources said it will also be

  taken to the Union Cabinet for approval. The boards of the bank and LIC

  are yet to approve the transaction.

  "It will take another month before the deal is finalised," said an official

  privy to the development.

  The Centre currently holds an 80.96 per cent stake in IDBI Bank. Over the

  last few years, it has been looking at options to recapitalise the lender,

  which saw bad loans rise to ₹55,588 crore in March 2018.

  The bank had received ₹10,610 crore as capital infusion from the Centre in

  2017-18.

  Shares of IDBI Bank rose 10.02 per cent on Friday to close at ₹54.90 apiece

  on the Bombay Stock Exchange. Earlier in the day, the lender had issued a

  statement to the bourses that "no such discussion has taken place in the

  board of IDBI Bank" on a proposed capital injection of ₹13,000 crore by

  LIC.

  (Published on June 29, 2018 by Business Line)

  POLL POURI (Published on 30/6/2018)

  IDBI Bank bail out

  Is it a good idea to use LIC to bail out IDBI Bank?

  Yes 29%

  No 66%

  Can't say 5%