Life Insurance Corporation (LIC) board granted its approval for acquiring up to 51 per cent stake in IDBI bank, the New Indian Express has reported.
Earlier, Insurance Regulatory and Development Authority of India (IRDAI) had approved the acquisition plan proposed by the state-owned insurance company. The LIC had to seek the IRDAI’s approval as insurance companies cannot own more than 15 per cent in a listed firm. Next, the company will have to approach Securities Exchange Board of India (SEBI) for further approvals.
IDBI was the first lender to be put on to prompt corrective action (PCA) list. The bank’s Non Performing Assets (NPA) touched to Rs 55,600 crore at the end of the fourth quarter, with the bad loans ratio touching 27.95 per cent.
LIC's acquisition will infuse some capital to the debt ridden bank. It is estimated that it may help the bank to get Rs 10,000 crore to Rs 13,000 crore as capital. With the acquisition, LIC will get close to 2,000 more branches and the bank will benefit from the capital infusion, as well as get accounts of 22 crore policy holders.
The opposition parties have been critical of LIC acquiring debt ridden IDBI bank.
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