IDBI Bank seeks Centre’s nod to sell stake to LIC

Mumbai: The board of IDBI Bank on Tuesday decided to seek the government’s view on LIC’s proposal to acquire up to 51 per cent stake in the bank.

The board meeting took place a day after LIC got approval of its board to increase its stake in the bank up to 51 per cent.

In a regulatory filing, IDBI Bank said it has received a letter from LIC expressing its interest in acquiring 51 per cent controlling stake in IDBI Bank, as a promoter through preferential allotment of shares/open offer.

The bank’s board considered the proposal and “decided to seek the Government of India’s decision in this regard”, the filing said.

Irdai has already given its approval to the insurer for the stake purchase.

LIC stake buy will help the state-owned bank get a capital support of Rs 10,000-Rs 13,000 crore.

Once the deal goes through, IDBI Bank, which is grappling with mounting toxic loans with gross NPAs rising to a staggering Rs 55,600 crore at the end of the March quarter, will get much needed capital support to revive its fortune.

LIC currently owns 7.98 per cent in the bank compared with 10.82 per cent as on March 31, 2018.

Last month, Irdai had given approval to LIC to acquire controlling stake in state-run lender, which is sitting on a huge pile of stressed assets.

As per current regulations, an insurance company cannot own more than 15 per cent in any listed financial firms.