The government on Monday defended the move to get insurance behemoth LIC to bail out the beleaguered IDBI Bank, saying it is an acquisition and not an investment.
The government sources said LIC is keen on setting up a bank of its own or acquiring a public sector lender.The sources said a strategic sale of IDBI Bank would not have realised the real asset value.
As the board of Life Insurance Corporate of India, Indias largest life insurer, approved a proposal to take up a controlling stake in IDBI Bank, analysts and market watchers expressed shock and disapproval.The government has said that the boards of the respective entities will take a call on the matter.LIC board meanwhile has decided to move IRDA and RBI for necessary approvals.
The LIC-IDBI Bank will expand network with more branches and better geographical coverage and do regular banking.
Earlier, the public sector life insurer had applied for a banking licence from RBI during Governor Raguram Rajans tenure through its subsidiary LIC Housing Finance when the central bank had opened up bank licensing in 2013.