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IRDAI clears LIC-IDBI Bank deal; insurance company to invest Rs 10,000-13,000 crore in tranches

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NEW DELHI: IRDAI on Friday approved LIC’s plan to buy 51 per cent stake in IDBI Bank, as the insurance regulator gave the insurer exemption from 15 per cent investment cap.

The Life Insurance Corporation of India is expected to invest Rs 10,000-13,000 crore in tranches in the NPA-mired state-run lender, ETNow quoted sources. The insurer will pare its stake in the bank to 15 per cent in 5-7 years, sources added.

The valuation will be decided as per Sebi regulations. Post the deal, the government's stake in the bank will fall below 51 per cent.

Shares of IDBI Bank today surged over 10 per cent amid reports that LIC may acquire majority stake in the company.

The IDBI Bank stock zoomed 10.02 per cent to settle at Rs 54.90 on the BSE.

The company's market valuation surged Rs 7,566.73 crore to Rs 22,954.73 crore.

The government currently holds 80.96 per cent stake in the bank and the deal may involve both real estate and non-core entities of IDBI Bank valued at around Rs 14,000 crore.

LIC has a 10.82 per cent stake in the state-run lender, said to an ET report. However, in a clarification to the exchanges, IDBI Bank on Friday said no discussion had taken place with regard to capital injection of Rs 13,000 crore in the bank by insurance major LIC, PTI reported. Clarifying on the matter, the bank said, "Please refer to your mail dated June 29, 2018, regarding news clarification 'LIC plans Rs 13000 crore capital injection in IDBI Bank.

It is hereby informed that no such discussion has taken place in the board of the IDBI Bank." IDBI Bank had posted a loss of Rs 5,662.76 crore for the quarter ended March 31.

It had posted a net loss of Rs 3,199.77 crore in the corresponding quarter last year.

Percentage of net NPA jumped to 16.69 per cent against 16.02 per cent on a quarter-on-quarter basis.

It was at 13.21 in Q4FY17.

Amount of gross non-performing assets jumped to Rs 55,588.26 crore against Rs 44,752.59 crore on year-on-year basis.




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