Life Insurance Corporation’s board approved the acquisition of up to 51 percent stake in IDBI Bank by the insurance major, Economic Affairs Secretary SC Garg said on Monday.
Mr Garg said the board, which met here, approved LIC buying up to 51 per cent stake in IDBI Bank.
It will get about 2,000 branches through which it can sell its products, while the bank would get massive funds of LIC.
Now the state-owned Life Insurance Corporation of India (LIC) will approach markets regulator Sebi (Securities and Exchange Board of India).
The bank would also get accounts of about 22 crore policyholders and subsequent flow of fund.
Insurance regulator India has already given its approval to the insurer for the stake purchase.
LIC stake buy will help the debt-ridden state-owned bank get a capital support of Rs. 10,000 crore- Rs. 13,000 crore.
LIC has been looking to enter the banking space by acquiring a majority stake in IDBI Bank as the deal is expected to provide business synergies despite the lender’s stressed balance sheet.
Once the deal goes through, IDBI Bank, which is grappling with mounting toxic loans with gross non-performing assets rising to a staggering Rs. 55,600 crore at the end of the March quarter, will get much-needed capital support to revive its fortune.