Insurance Regulatory and Development Authority of India (Irdai) on Friday permitted Life Insurance Corporation of India (LIC) to buy up to 51 per cent stake in the debt-ridden IDBI Bank Ltd, sources said.
The decision, they said, was taken at a the meeting of Irdai’s board of directors in Hyderabad Frdiay afternoon. LIC currently hold 11 per cent stake in the bank.
The sources added that if the deal goes through, IDBI Bank will get capital support of Rs 10,000-Rs 13,000 crore.
State-owned LIC has been looking to enter banking by acquiring a majority stake in IDBI Bank as the deal is expected to provide business synergies despite the lender’s stressed balance sheet.
“You will get to know whatever is the decision. You will get to know after the minutes of the Board meeting are approved. We will be posting it on our website,” Irdai Chairman Subhash Chandra Khuntia told reporters after the Board meeting in Hyderabad.
However, according to the sources, the regulator has permitted LIC to pick up to 51 per cent stake in IDBI Bank, thereby relaxing existing rules for investment.
As per norms, an insurance company cannot hold more than 15 per cent stake in a company.
IDBI Bank is grappling with mounting toxic loans with gross non-performing assets rising to a staggering Rs 55,600 crore at the end of the March quarter. During the three months, the lender’s net loss stood at Rs 5,663 crore.