LIC Approves The Acquisition Of 51% Stakes In IDBI Bank

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| July 16 , 2018 , 14:46 IST

The board of Life Insurance Corporation of India (LIC) approved the acquisition of 51 percent stakes in debt-laden IDBI Bank on Monday.

The deal also needs to be approved by the IDBI Bank and the government.

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

Though LIC is to acquire 51 percent stakes in IDBI Bank, as per the approved plan the state-owned Insurance Company will not have any management control over the IDBI Bank.

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

LIC will also present a comprehensive plan to reduce its stake to 15 percent over a period of seven years.

The deal was confirmed in Hyderabad on June 29. 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.

The 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.