Business

As IRDAI Give Clearance, LIC Acquire 51% Stakes In IDBI Bank

JAVED SAIFI | 0
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| June 30 , 2018 , 12:01 IST

The Insurance Regulatory and Development Authority of India (IRDAI) on Friday had approved the offer of Life Insurance Corporation of India (LIC) to acquire 51 stakes in debt-laden IDBI Bank, thereby gaining Control over the bank.

According to the reports in the media, the deal was confirmed in Hyderabad on Friday. Before acquiring in total 51 stakes LIC had 15 percent stake in the IDBI bank. As per Insurance Regulatory norms, it is not allowed for Insurance Company to acquire more than 15 percent stake in the enterprise, but it is not for the first time when Insurance Regulatory IRDAI has allowed LIC to acquire more than 15 percent stake in any enterprise.

As per media reports, one of the experts has claimed that this deal is going to be a great boost for LIC to enter in the banking sector and to expand the horizon of the company, but the question is why Debt-laden IDBI bank.

As per media reports IRDAI official has said, “ LIC is using policyholders’ money to buy a loss-making bank. These are cheap funds and the government is using special provisions in the Act to facilitate the takeover with policyholders’ money. Under Section 21 of the Act, the government can give special directions to the Corporation. Under Section 43, LIC has been granted some exemptions which are not available to other insurance companies.”

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It is not for the first time when LIC investing in Debt-laden bank. In the year of 2017 LIC issued a loan of 1 Trillion rupees. Life Insurance Corporation of India is owned by Government of India with an estimated total asset value of $320 billion. Its Subsidiaries are LIC Housing Finance, LIC Pension Fund Ltd, LIC International, LIC Cards Services, and LIC Mutual Fund.