LIC closer to seal IDBI Bank deal

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  LIC closer to seal IDBI Bank deal; may infuse

  Rs 13,000 crore in bank

  ETMarkets.com|

  Updated: Jun 29, 2018, 10.05 AM IST

  NEW DELHI: Life Insurance Corporation (LIC), the

  largest life insurer in India, has finalised the deal

  with IDBI BankNSE 8.02 %, which will eventually

  pave way for the infusion of Rs 13,000 crore in the

  NPA-mired state-run bank, ETNow reported. The

  lender will make a preferential allotment of shares to

  LIC, the report said.

  Post this deal, the government's stake in IDBI Bank

  will fall below 51 per cent, the report added.

  IRDA is likely to clear the proposal today. The

  insurance regulator may give LIC exemption from 15

  per cent investment cap.

  The government currently holds an 80.96 per cent

  stake in the bank and the deal may involve both real

  estate and non-core entities of IDBI Bank valued at

  around Rs 14,000 crore. LIC has a 10.82 per cent

  stake in the state-run lender, according to an ET

  report.

  The current market valuation of IDBI Bank, at around

  Rs 24,000 crore, does not reflect its inherent value, a

  senior government official told ET. "The bank has

  real estate worth around Rs 7,000 crore and also

  non-core assets of a similar amount. The bank is in
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  the process of a turnaround and will post profits

  soon," the official said.

  The proposal is part of a plan to professionalise the

  state-owned lender using the Axis Bank model,

  which has been mooted for a long time. One of the

  reasons why the government is looking at a state-

  owned investor is that the bank's valuation is

  distressed.

  IDBI Bank posted a loss of Rs 5,662.76 crore for the

  quarter ended March 31. It had posted a net loss of

  Rs 3,199.77 crore in the corresponding quarter last

  year. Percentage of net NPA jumped to 16.69 per

  cent against 16.02 per cent on a quarter-on-quarter

  basis. It was at 13.21 in Q4FY17.

  Amount of gross non-performing assets jumped to

  Rs 55,588.26 crore against Rs 44,752.59 crore on

  year-on-year basis.

  At 09:58 am, shares of the lender were trading at Rs

  55.15 apiece on BSE, up 10.52 per cent.

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