Business

IDBI To Be Named As 'LIC IDBI Bank Or LIC Bank'

HARSH RANJAN | 0
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| February 6 , 2019 , 17:30 IST

The board of IDBI Bank on Monday said that it has sought approval from the Reserve Bank of India for a name change of the lender to either LIC IDBI Bank or LIC Bank following its takeover by Life Insurance Corporation.

"The bank is hopeful that its first preference of ‘LIC IDBI Bank’ is accepted unless there is a conflict issue," said Rakesh Sharma, chief executive officer of IDBI Bank.

The board in its meeting on Monday has “approved a proposal for change of name of IDBI Bank, subject to RBI’s no objection, name availability or reservation by Ministry of Corporate Affairs (MCA), shareholders’ approval through Postal Ballot, Stock Exchanges’ approval, etc”.

Rakesh Sharma, MD & CEO, IDBI Bank LIC said, "we have also started on the second part and have ensured that the employee performance determines their compensation and growth in the bank."

The board has proposed LIC IDBI Bank Ltd as the first preference followed by LIC Bank Ltd. Meanwhile, IDBI Bank posted widening of loss by nearly threefold to Rs 4,185.48 crore for the third quarter ended December 2018 as bad loans surged.

The bank had reported a net loss of Rs 1,524.31 crore in the corresponding quarter of the previous fiscal.

Total income decreased to Rs 6,190.94 crore for the quarter, compared with Rs 7,125.20 crore in the corresponding quarter a year ago, IDBI Bank said in a statement.

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The bank may also shed its tag of a public sector bank and has sought regulatory guidance on whether it would be classified as a private bank from here on.

Classification as a private bank could mean some compliance changes and may also mean revision in employee compensation.

Over time, it will have to pare this down to meet both banking and insurance regulations which restrict the amount a single entity can hold. A timeline for this is yet to be determined, the bank’s management said on Monday.

“The aim is that in the future there are no negative surprises on provisioning. But LIC, with their ample capital, can provide any future capital needed by way of preference shares. That option is open for us," said KP Nair, deputy managing director, IDBI Bank.

In August last year, the Cabinet approved the acquisition of controlling stake by Life Insurance Corporation (LIC) as a promoter in the bank through a combination of preferential allotment and open offer of equity.