India’s largest life insurer, Life insurance Corporation of India (LIC) on Monday approved the proposal to acquire majority stake in the debt-ridden IDBI bank. The deal will help the LIC to enter into the banking space who is supporting IDBI to clear their stressed balance sheet.
Earlier, LIC holds 7.98 per cent stake in IDBI but with the final approval of the deal, they will be holding 43 per cent more thus becoming the stake holder of 51 per cent in IDBI.
Economic affair secretary Subash Chandra Garg talked the deal between LIC and IDBI.
He said, “Open offer for IDBI bank’s share may not be required as public holding in the bank is very low. If required, LIC may come out with an open offer, but not material in this context”.
LIC will most likely will increase the share stake via the preferential share route and they will now proceed to the market regulator SEBI for the majority stake in debt-ridden IDBI bank.
The deal will help the cash-strapped PSU bank with the financial assistance of Rs 10,000 to Rs 13,000 crore who had already in the debt cloud of Rs 55,600 crore bad loans at the end of March.