LIC finishes securing of 51% stake in IDBI Bank

LIC acquires 51% of IDBI bank

Insurance giant LIC acquired 51 percent controlling stake in IDBI Bank on Monday. This marks the entry of more than 60 years old state-owneinsurers into the banking space
With the accession of controlling stake in IDBI Bank by LIC, IDBI Bank will now become private sector loaner. The number of public sector loaners has reduced down to 20 with the government transferring its majority stake in favor of LIC.


“The deal, conceptualized in June 2018, is envisaged as a win-win situation for both IDBI Bank and LIC with an opportunity to create enormous value for shareholders, customers & employees of both entities through mutual synergies,” IDBI Bank said in a BSE filing


In August last year, the Cabinet approved the acquisition of controlling  stake by Life Insurance Corporation (LIC) as a booster in the coin bank through a combination of preferential allotment and open go of equity.
LIC had been hoping to enter the managing an account space by procuring a dominant stake in IDBI Bank, as the arrangement is relied upon to give business collaborations in spite of the loan specialist’s focused on monetary record.

The bank had announced a total deficit of Rs 3,602.49 crore amid the September quarter of 2018-19. Its gross non-performing resources hit 31.78 percent (Rs 60,875.49 crore) of the gross advances as on September 30, 2018, as contrasted and 24.98 percent in the year-back period.
IDBI Bank has about 1.5 crore retail clients and around 18,000 workers. With this arrangement, LIC will have a vital interest in a vast bancassurance channel, along these lines expanding its profitability and lessening appropriation costs.

“IDBI Bank and LIC have started working to ensure full realization of their synergies over the next 12 months. Improved financial health will pave the way for the bank to exit from prompt corrective action (PCA) in a time-bound manner and be a future-ready, top-ranked bank. LIC and IDBI Bank are committed to serve the interests of all stakeholders,” the bank said.

The bank’s board likewise endorsed the arrangement of Rajesh Kandwal as an extra executive and LIC’s nominee director on the leading group of IDBI Bank. Kandwal is the chief and the CEO of LICHFL Care Homes Ltd. With the obtaining of 51 percent, LIC can choose three additional executives on the leading group of IDBI Bank. Be that as it may, the board is yet to accept any call with the difference in name of the bank as LIC has solid brand esteem.

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