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LIC board likely to approve IDBI Bank investment today

LIC will own 51 percent in IDBI Bank after the deal and will be the bank's largest shareholder

July 16, 2018 / 12:26 PM IST
 
 
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The board of Life Insurance Corporation of India (LIC) will meet on Monday to discuss and approve a plan to own 51 percent stake in state-owned IDBI Bank.

The insurance regulator has already given its go-ahead for the proposal. Sources said that LIC's board of directors is also likely to approve the deal.

The 12-member board comprises of LIC chairman VK Sharma and its four managing directors as members.

Apart from them, the board also features representatives of the government, including from the department of financial services and the department of economic affairs.

"The contours of the deal including the structure, timeline, investment will be decided today," a source told Moneycontrol.

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While the board has already been apprised of the proposal, it will meet formally today to discuss the deal.

LIC will own 51 percent in IDBI Bank after the deal and will be the bank's largest shareholder.

Insurance Regulatory and Development Authority of India has approved the deal on the condition that the life insurer will gradually bring its stake in the bank down after a few years.

The aim of the deal is to infuse capital into the bank, which is facing a severe challenge in the form of mounting bad debt.

After the LIC board's approval comes through, the deal will need to be approved by the Union cabinet, capital markets regulator Securities and Exchange Board of India, and the Reserve Bank of India.

Sources said that LIC will take at least 5-7 years to help the bank in its recovery process, after which it will reduce its stake considerably.

IDBI Bank's net loss for the March quarter widened to Rs 5,662.76 crore on weakening asset quality and a rise in provisions.

During the quarter, the lender's provisions for non-performing assets rose 77.9 percent year on year to Rs 10,773.30 crore.
M Saraswathy
first published: Jul 16, 2018 12:26 pm

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