IDBI clears LIC’s proposal to pick up additional 7% stake in the bank

IDBI Bank on Friday approved LIC’s proposal to pick up additional 7% stake in the bank, a move that will eventually lead to acquisition of 51% shareholding by the insurance behemoth in the debt-ridden lender.

The board of directors have approved the proposal for seeking shareholders’ approval through postal ballot for the preferential issue of equity capital to Life Insurance Corporation of India (LIC) aggregating up to 14.90% of the bank’s post issue paid up capital, IDBI Bank said in a filing to stock exchanges.

At present, insurance behemoth LIC holds 7.98% stake in the public sector bank. Earlier this month, the Union Cabinet had approved LIC’s proposed acquisition of up to 51% stake in debt-ridden IDBI Bank. This first round of stake sale, people aware of the matter said, will take care of the immediate need of IDBI Bank and help it meet capital adequacy norms at the end of second quarter.

The bank, in which the government holds 85.96% stake, had posted a net loss of ₹2,409.89 in the quarter ending June 2018. It had a gross non-performing asset (NPA) of about ₹57,807 crore. The board of Insurance Regulatory and Development Authority of India (Irdai), at its meeting held in Hyderabad in June, had permitted LIC to increase its stake from 10.82% to 51% in IDBI Bank.

NEW DELHI: