LIC GETS BOARD NOD TO RAISE STAKE IN IDBI BANK TO 51%

NEWDELHI: The board of Life Insurance Corporation of India (LIC) has approved a proposal for the state-owned company to hold a 51% stake in IDBI Bank, department of economic affairs secretary Subhash Chandra Garg said on Monday.

India’s largest life insurer currently holds around 7.5% stake in IDBI Bank, and will acquire the remaining stake from the government, Garg said in New Delhi, adding that most probably, IDBI Bank will issue preference shares to LIC to complete the deal. Using this route—rather than LIC directly buying the government’s stake in IDBI Bank— will ensure the bank gets capital, Garg added. Garg is one of the government nominees on LIC’S board.

He said that an open offer may not be required as the public shareholding in IDBI Bank is very small at 5%. “LIC will go through the process and make the open offer if necessary, but it is not very material,” he said.

The pricing of the deal will depend on the formula of the preference share issuance, he added.

Mint was the first to report on June 11 about the government looking at financial institutions like LIC to pick up a stake in IDBI Bank and then let a professional board run the bank.

The board of IDBI Bank will consider the proposal in a meeting on July 17, said a banker who did not wish to be identified.