Sale of IDBI Bank a step closer after LIC gets Sebi nod

MUMBAI: Paving the best way for the sale of IDBI Bank, Sebi has authorized the reclassification of Life Insurance Corporation as a public shareholder from promoter of the financial institution as soon as the sale transaction is concluded. The regulator’s nod is topic to situations, together with LIC’s voting rights being capped at 10%, no board illustration or management over the financial institution’s affairs, and decreasing its stake to fifteen% or beneath inside two years of the deal closure, as directed by RBI. The Department of Investment and Public Asset Management (Dipam) had conveyed Sebi’s determination to LIC after the Cabinet’s 2021 approval for strategic disinvestment in IDBI Bank.Recently, speculations that IDBI financial institution can be acquired by Emirates NBD have been sparked when the Middle Eastern lender received a licence from RBI to function a wholly owned subsidiary in India. LIC chairman R Doraiswamy, in a latest interview to TOI stated, “We acquired up to 51% of IDBI Bank because their recapitalisation need provided us an opportunity. We are now at 49.2%. The govt and LIC will jointly offload part of our stake during privatisation, but we will retain a significant holding post-sale and continue the relationship.”LIC turned the proprietor of IDBI Bank in Jan 2019 when it acquired a 51% controlling stake for about Rs 21,624 crore to rescue the lender from mounting dangerous loans and weak capital buffers. With the insurance coverage large’s infusion and takeover of administration management, IDBI Bank was reclassified by RBI as a personal sector lender. The deal offered IDBI Bank with capital for revival whereas giving LIC, which already held about 10.8% earlier than the transaction, entry to the financial institution’s department community for insurance coverage distribution. Despite continued challenges round asset high quality, the deal marked one of the most important state-backed interventions to stabilise a struggling lender.