"Acquisition of stake by LIC, with equally strong ability to infuse capital, is unlikely to drive the credit profile in the near-term till there is an improvement in the standalone profile of the bank," rating agency Icra said in a report. Icra has an 'A' rating on the bank.
Its head for financial sector ratings, Anil Gupta said the acquisition of stake in IDBI Bank is likely to be done under the policyholders accounts of LIC and hence even a 51 per cent stake in the bank will not make IDBI bank a subsidiary of LIC.
"Being an investment in the policyholders account, the stake will be transient in nature and LIC will have to reduce its stake in the bank going forward and bring it down to the regulatory requirement of 15 per cent," Gupta said.
He said the capital infusion from LIC into the bank will offset the future losses.
He further said the intent of LIC or the government on the long-term ownership structure will be key rating drivers for the lender, going forward.
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)