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LIC board to meet on Tuesday to decide raising stake in IDBI Bank to 51%

The board will discuss timeline for the open offer, board-level appointments and future strategy for revitalising IDBI Bank, sources said

Press Trust of India  |  New Delhi 

IDBI Bank
IDBI Bank

The board will meet Tuesday to decide on the modalities for increasing stake in debt-ridden to 51 per cent, a move that will provide the behemoth entry into the space.

The board will discuss timeline for the open offer, board-level appointments and future strategy for revitalising Bank, sources said.

Besides, sources said, the board will also authorise Corporation of (LIC) to appoint a to carry out the acquisition process.

The board will also ask the insurer to do due diligence of the and then proceed for various regulatory clearances, sources added.

Meanwhile, is in the process of picking up additional 7 per cent stake in through preference shares. With this, total holding in the bank would rise to 14.9 per cent. At present, holds 7.98 per cent stake in the

The stake increase by LIC will help the lender to meet the intimidate capital requirement that will enable to meet regulatory norms at the end of second quarter.

In August, the had approved LIC's proposed acquisition of up to 51 per cent stake in debt-ridden IDBI Bank.

The bank, in which the government holds 85.96 per cent stake, had posted a net loss of Rs 24.09 billion in the quarter ending June 2018. It had a gross non-performing asset (NPA) of about Rs 578.07 billion.

The board of Regulatory and Development Authority of (Irdai), at its meeting held in in June, had permitted LIC to increase its stake from 10.82 per cent to 51 per cent in IDBI Bank.

As per current regulations, an insurance company cannot own more than 15 per cent in any listed financial firm.

LIC has been looking to enter the space by acquiring a majority stake in IDBI Bank as the deal is expected to provide business synergies despite the lender's stressed balance sheet.

With the culmination of the deal, LIC will get about 2,000 branches by which it can sell its products, while the bank would get massive funds of LIC.

First Published: Mon, September 03 2018. 13:19 IST
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