The board of the insurance regulator IRDAI on Friday cleared a proposal by which the Life Insurance Corporation(LIC) can pick up upto 51per cent in the IDBI bank while deferring the final approval of  the revamped “Reinsurance Regulations’.

“Yes , we have cleared a proposal from the LIC to pick up upto 51per cent in the IDBI Bank and asked them to inform us afterwards when they plan to bring it down to 15 per cent, which is the maximum permissible limit, a life insurer can have in terms of investment in another company. But, we have postponed our approval for the new reinsurance regulations,’’ said top sources at IRDAI.

The board of LIC will soon meet to finalise the details of its investment in IDBI Bank.However sources said, for the LIC it will be some kind of acquisition and not a strategic investment and the corporation is expected to invest Rs 10,000-13,000 crore in tranches in the NPA-mired state-run lender, 

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. 

The government currently holds 80.96 per cent stake in the bank and the LIC has a 10.82 per cent stake in the state-run lender, 

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,

The IRDA Board, which was also expected to clear the revamped `Reinsurance Regulations', has postponed it and will discuss it in its next meeting after three months.

The IRDA on 5th May, 2017.had constituted an `Expert Committee on Reinsurance’ headed by former member of IRDAI, M Ramprasad to revamp the existing reinsurance regulations set-up to further streamline reinsurance operations in the country. 
The committee, that had members including foreign reinsurers and other experts, had unveiled the draft regulation “Insurance Regulatory and Development Authority of India (Reinsurance) Regulations, 2018’ for industry feed-back on Jan  05. 
The Draft Regulations seek to do away with different categories (i.e. Category I and Category II) of applicants, currently mentioned under the FRB Regulations and Lloyd’s Regulations. It is proposed that an applicant shall make a requisition for registration application for reinsurance business wherein the branch office of a foreign reinsurer (FRB) shall maintain a minimum retention of 50% of the Indian reinsurance business.

The Draft Regulations propose changes to certain existing definitions in the General Reinsurance Regulations and Life Reinsurance Regulations. It also proposes to introduce new definitions of the terms like alternative risk transfer (ART),Reinsurance Slip, Retrocedant,inclusion of “crop” as a separate Insurance Segment, Board,Exempted Insurer, International Financial Service Centre
Insurance Office (IIO).