New Delhi: Insurance regulator IRDAI(Insurance Regulatory and Development Authority of India) on Friday permitted Life Insurance Corporation (LIC) to pick up to 51 per cent stake in the debt ridden IDBI Bank, sources said.The decision, they said, was taken at a the meeting of the Board of Directors of IRDAIat Hyderabad on Friday afternoon.LIC currently holds an 11 per cent stake in the bank.
Sources added that if deal goes through, IDBI Bank will get capital support of Rs 10,000 crore-Rs 13,000 crore.
State-owned LIC has been looking to enter the banking space by acquiring majority stake in IDBI Bank as the deal is expected to provide business synergies despite the lender's stressed balance sheet.(Read:IDBI Bank-LIC Deal: Boards To Take A Call, Says Finance Ministry Official)"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 sources, the regulator has permitted the LIC to pick up to 51 per cent stake in IDBI Bank, thereby relaxing existing rules for investment.(B Sriram Appointed As IDBI Bank's CEO| Mahesh Jain Appointed As RBI Deputy Governor)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 latest March quarter.During the three months, the lender's net loss stood at Rs 5,663 crore.