Centre wants LIC, PSUs to buy IDBI Bank’ s stake in SIDBI

LIC, the largest life insurer in country, currently holds 12.21% in SIDBI

The government is in favour of public sector financial institutions such as Life Insurance Corp of India acquiring IDBI Bank's 16.25 per cent stake in Small Industries Development Bank of India, a senior finance ministry official said. The government has already "sounded out" LIC and other state-owned insurers about buying out IDBI Bank's stake in SIDBI, the official said. "Preferably one of the public sector financial institutions should acquire IDBI Bank's stake in SIDBI. It is a business decision and if they see value, they will bid for it," the official told Cogencis. IDBI Bank has put its 16.25 per cent stake in SIDBI on the block and last month appointed SBI Capital Markets to advise it on the transaction. LIC is interested in acquiring a part of the IDBI Bank's stake in SIDBI, but not the entire 16.25 per cent stake, another official said. LIC already has a significant holding in SIDBI, so it is not keen to buy out the entire IDBI Bank's stake. The government has also sounded out other insurance companies like General Insurance Corp of India and New India Assurance Co for buying up stake, the second official said.

LIC, the largest life insurer in the country, currently holds 12.21 per cent in SIDBI. State Bank of India is the largest shareholder in SIDBI with 16.73 per cent stake, followed by IDBI Bank. The government holds 15.40 per cent stake in the financial institution, and the remaining is held by banks and insurance companies. SIDBI was a wholly-owned subsidiary of IDBI until 2000, when the latter sold 51 per cent stake to public sector banks and insurers.