LIC allowed to buy 51% stake in IDBI

STATE- RUN insurance major LIC currently holds 11% stake in the bank. Sources added that if the deal goes through, IDBI Bank will get capital support of about 13,000 crore.

Mumbai, June 29: The long- cherished plan of the national insurer LIC to own a bank on Friday moved closer to reality with the regulator Irdai giving a go- ahead to pick a controlling stake in the crippled IDBI Bank.

The decision was taken at the meeting of the board of the Irdai in Hyderabad, sources said.

“The stake buy is happening. The clearance that the Irdai has accorded to LIC is for acquiring 51 per cent stake in the bank. LIC is going to have a controlling stake and is going to pump ` 10,00013,000 crore into IDBI Bank,” the sources told PTI.

LIC’s key rivals in the public sector as well as in the private sector have their own banks, which is a key market entry tool for any insurer to improve sales.

The life insurance major already owns 10.8 per cent stake in the bank, which has been struggling to survive with mounting losses in the past three financial years while its bad loans hit the roof — a tad below 28 per cent — the highest in the industry.

The government owns 80.96 per cent in the bank, whose market cap rose to ` 22,954.79 crore today after an over 10 per cent rally over media reports of the LIC deal.

The IDBI counter has been on fire since media reports about the deal began last week. Today the counter rallied a whopping 10.2 per cent at ` 54.90 on the BSE, which Sensex rallied 1.10 per cent to 35,423.48 points.