LIC’s dream of owning a bank moves closer to reality as Irdai lets it snap up IDBI Bank

Source: The Hitavada      Date: 30 Jun 2018 10:51:26


MUMBAI,

(PTI),

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 Insurance Regulatory and Development Authority of India (Irdai) in Hyderabad this afternoon, 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 Rs 10,000-13,000 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 pc -- the highest in the industry. The Govt owns 80.96 pc in the bank, whose market cap rose to Rs 22,954.79 crore today, over media reports of the LIC deal.

The IDBI counter has been on fire since media reports about the deal began last week. Today, it rallied a whopping 10.2 per cent to Rs 54.90 on BSE. IDBI Bank is grappling with mounting toxic loans which has soared to a staggering Rs 55,600 crore in FY18.

 

AIBEA asks Govt to retain at least 51% stake in IDBI Bank

VADODARA,

(PTI),

OPPOSING the probable majority stake sale by the Government in IDBI Bank to LIC, bank union AIBEA has asked the Centre not to go back on its commitment on the debt-laden bank, and retain at least 51 per cent stake.

In a letter to Finance Minister Piyush Goyal on Friday, All India Banks Employees Association (AIBEA) General Secretary C H Venkatachalam also asked the Government to come forward with adequate capital infusion in the bank.

It can be noted that according to media reports the Life Insurance Corporation of India (LIC) is planning to acquire a majority stake in IDBI Bank, which is likely to reduce the Government’s stake to below 51 per cent. LIC currently holds 10.8 per cent in the bank.