Moneycontrol PRO
UPCOMING EVENT:Join us for New HorAIzon from Oct 6-7, 2pm and be a part of exciting conversations on tech & innovation

LIC may participate in bank recapitalisation programme: Sources

State-owned Life Insurance Corporation may be roped in to participate in the Rs 2.11 lakh crore recapitalisation initiative for public sector banks (PSBs).

October 29, 2017 / 01:21 PM IST
lic_slide_image_300_85166702

lic_slide_image_300_85166702

State-owned Life Insurance Corporation may be roped in to participate in the Rs 2.11 lakh crore recapitalisation initiative for public sector banks (PSBs).

As part of the programme, LIC could also increase its stake in various PSBs which are required to raise Rs 58,000 crore from the capital market, sources said.

Besides, they said, LIC could participate in a non-operating holding company (NOHC) structure to which the government may transfer its share in various PSHs.

NOHC could then issue recapitalisation bonds worth Rs 1.35 lakh crore. However, the government has said that nature of bonds and who will issue them would be decided in the due course.

Finance Minister Arun Jaitley last week said that there were multiple options before the government for recap bonds and they are being examined and the best ones would be explored.

Close

LIC in the past has pumped capital in PSBs through preference share allotment and Qualified Institutional Placement (QIP). Earlier this year, Bank of India issued preference share to LIC worth Rs 451 crore.

Similarly, UCO Bank, IDBI Bank, United Bank of India, Dena Bank and Indian Overseas Bank also issued preference shares to LIC in the past few years as part of their effort to shore up their capital.

In the recent Rs 15,000 crore QIP placement by the country’s largest lender State Bank of India (SBI), LIC was one of the largest participants. It picked up shares worth over Rs 5,800 crore or 38.6 percent of the total.

Sources said that if there is LIC participation in the government recapitalisation initiative, it would be as per the regulatory investment ceiling fixed by the Insurance and Regulatory Development Authority of India (Irda).
PTI
first published: Oct 29, 2017 01:20 pm

stay updated

Get Daily News on your Browser
Sections
ISO 27001 - BSI Assurance Mark