Economic affairs secretary S.C. Garg on Tuesday said Life Insurance Corp (LIC) will explore an open offer in IDBI Bank. Market regulator, the Securities and Exchange Board of India, will decide on open offer exemption, he added.
He also said the LIC board has decided the timeline for the acquisition of 51 per cent stake in IDBI Bank.
IDBI Bank recently approved LIC’s proposal to pick up an additional 7 per ent stake in the bank, a move that will eventually lead to the acquisition of 51% shareholding by the insurer in the debt-ridden lender. Earlier this month, the Cabinet approved LIC’s proposed acquisition of up to 51 per cent stake in IDBI Bank. This first round of stake sale, sources said, will take care of the immediate need of IDBI Bank and help it meet capital adequacy norms at the end of the second quarter.
The move will mark the entry of the insurance behemoth into the banking space.In August, the Cabinet had approved LIC's proposed acquisition of up to 51 per cent stake in IDBI Bank.
The board of Insurance Regulatory and Development Authority of India (Irdai) in June had permitted LIC to go ahead with the stake buy.
The government holds 85.96 per cent stake in IDBI Bank.IDBI Bank reported a net loss of Rs 2,410 crore during the April-June quarter, its seventh consecutive quarterly loss. Its gross bad loan ratio worsened to 30% and even as it kept aside every rupee it made for provisioning, the coverage ratio is 64.45per cent. It had gross non-performing assets (NPAs) of around Rs 57,807 crore.