LIC gets RBI's nod to increase stake in Kotak Mahindra Bank to 9.99%

The Reserve Bank of India (RBI) has granted approval to state-owned insurance behemoth Life Insurance Corporation (LIC) of India to raise its stake in private lender Kotak Mahindra Bank up to 9.99 per cent. 

Currently, the life insurer holds 4.96 per cent in the private lender. In a notification to exchanges, the lender said, “…Kotak Mahindra Bank has received an intimation from LIC stating that the Reserve Bank of India (RBI) had granted its approval to LIC, for increasing its holding in the bank up to 9.99 per cent of the paid-up equity share capital of the bank...”.

Shares of Kotak Mahindra Bank closed with gains of 2.92 per cent on the BSE after the announcement —the most among Sensex components. The approval of the central bank will be valid for one year.

According to the central bank norms, prior approval of the RBI is required to increase stake in private banks beyond 5 per cent.

LIC is one of the biggest institutional investors in India’s stock market and has a stake in a number of private and public sector banks. LIC has a stake in as many as 24 scheduled commercial banks, shows the data from Capitaline. It holds 49.24 per cent stake in IDBI Bank.

Once LIC raises its shareholding in Kotak Mahindra Bank to 9.99 per cent, it will be the second-largest shareholding of the insurer in a scheduled commercial bank. Among other major banks, LIC holds 8.8 per cent in Canara Bank, 8.3 per cent in Punjab National Bank and State Bank of India, 8.2 per cent in Axis Bank, and 7.6 per cent in ICICI Bank.  

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