Irdai seeks proposal from LIC to reduce stake in IDBI Bank
NEW DELHI: Insurance regulator Insurance Regulatory and Development Authority of India (Irdai) on Monday said it has sought proposal from Life Insurance Corporation of India (LIC) for paring its shareholding in the recently acquired controlling stake in IDBI Bank.
Irdai stipulates that insurers are allowed to hold only up to 15% stake in any listed entity. But LIC, with a special dispensation from Irdai, holds more than the limit in some state-run banks.
Besides, the Reserve Bank of India (RBI) permits a ceiling of 15% for promoter stake in a private sector bank.
“We will decide on the timeline (for stake reduction by LIC in IDBI Bank). We are not leaving it to them. I have asked them (LIC) to give a proposal and after that we will take a decision,” Irdai chairman Subhash Chandra Khuntia said on the sidelines of an event organized by Federation of Indian Chambers of Commerce & Industry (Ficci).
Last June, Irdai permitted LIC to acquire up to 51% stake in debt-ridden IDBI Bank. On December 28, LIC pumped ₹14,500 crore into the bank as part of its takeover, following which it injected another ₹ 5,030 crore on January 21.
As a result, LIC acquired 51% controlling stake in the bank, making the insurer the lender’s majority shareholder. For the third quarter ended December 2018, IDBI Bank reported widening of loss by nearly threefold to ₹4,185.48 crore. The bank had reported a loss of ₹1,524.31 crore in the year-ago period.
Total income fell to ₹6,190.94 crore for the quarter, compared with ₹7,125.20 crore in the corresponding period a year ago. With regard to exposure of the insurance firm to debt- ridden Infrastructure Leasing & Financial Services (IL&FS) group companies, Khuntia said, the regulator will ensure that policyholders do not lose money.
“Either they get it back fully or they will have to provide for it. Some of the IL&FS companies may be better off. We will find some ways so that policyholders are protected,” he said.