Although the Board might have decided,the acquisition has to be permitted by IRDAI as the stake after acquisition will exceed 15%.It is also a difficult decision for IRDAI to take,because post-acquisition stake will become 54%.With 54% stake,LIC will have to own the IDBI Bank for which permission from RBI is also required.
But there will be pressures from the Government not only on LIC,but also on the regulators IRDAI & RBI to approve the proposal.If it is allowed,it will set a bad precedent.We can expect some PLIs in SC if any official notification is issued.
But this widely publicized news will help us to counter the stand of LIC that policyholders' bonus will be adversely impacted by upgradation of pension.The acquisition of the 43% more stake in IDBI Bank by LIC can cause much more damage to the policyholders' interest than the cost of upgradation of pensionto a diminishing tribe of pension beneficiaries of LIC.The NPA of IDBI Bank at Rs 55888 cr is about 3 Times the NPA of Rs 18000 cr of LIC.The gross NPA ratio is 4.73 % as at 31/3/2017 and if the NPAs of IDBI Bank are added,the combined ratio will be 12.65% although the acquired Bank will be a separate entity.The 38 crores of policyholders are justified in questioning the acquisition move that will divert their money to run a sick Bank.It is not known whether the Board members discussed the implications of this decision for policyholders .
C H Mahadevan
But there will be pressures from the Government not only on LIC,but also on the regulators IRDAI & RBI to approve the proposal.If it is allowed,it will set a bad precedent.We can expect some PLIs in SC if any official notification is issued.
But this widely publicized news will help us to counter the stand of LIC that policyholders' bonus will be adversely impacted by upgradation of pension.The acquisition of the 43% more stake in IDBI Bank by LIC can cause much more damage to the policyholders' interest than the cost of upgradation of pensionto a diminishing tribe of pension beneficiaries of LIC.The NPA of IDBI Bank at Rs 55888 cr is about 3 Times the NPA of Rs 18000 cr of LIC.The gross NPA ratio is 4.73 % as at 31/3/2017 and if the NPAs of IDBI Bank are added,the combined ratio will be 12.65% although the acquired Bank will be a separate entity.The 38 crores of policyholders are justified in questioning the acquisition move that will divert their money to run a sick Bank.It is not known whether the Board members discussed the implications of this decision for policyholders .
C H Mahadevan
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