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The board of directors of the life insurance company (LIC) approved Monday the acquisition of a 51% stake in the IDBI Bank public bank, said the Secretary of State for the Economy, SC Garg. IANS that the Council also asked the President of the LIC to do a little more due diligence on IDBI Bank. "In addition, the Board also asked the President to meet the conditions set by the Indian Regulatory and Insurance Development Authority (IRDAI) while approving the stake acquisition plan. ", added the source.
After the meeting of the board of directors in New Delhi which lasted about two hours, Mr. Garg stated that the sales process could take place through preferential shares.
"The amount we are looking at According to the issue of preference shares," he said,
asked if an open offer would also be made for IDBI shares, Garg said that this was unlikely.
"A public offer might not be made The amount of public participation (in IDBI) is very small, only about 5 percent and will not have much impact on stake sales" , he said.
LIC will now approach the regulator of stock markets Garg said:
The IRDAI has already given approval for the purchase of stake stipulating that the interests of LIC insureds must be protected and that the reduction of LIC's participation in IDBI Bank over a period of
According to one source, the matching of the horoscope of the two organizations – LIC and IDBI Bank – has been done and other steps will be taken for their marriage.
However, the source said that The future position of the life insurance branch of IDBI Bank IDBI Federal Life Insurance It is not yet clear.
According to the source, the LIC Board of Directors has discussed the advantages and disadvantages of the stake acquisition proposal.
"The LIC will get more than 2,000 bank branches to sell its policies while IDBI Bank has the opportunity to get more retail business from LIC policyholders," adds source. for the LIC while investing in IDBI Bank is its huge unproductive badets (NPAs).
IDBI Bank, whose gross non-performing badets (NPA), or bad loans, rose to a crisp Rs 55,600 crore at the end of the fourth quarter ended in March, posted the loss of Rs 5,662.76 crore for the quarter as its numbers are further reduced by the deterioration of its NPAs.
The bank reported a net loss of Rs 3,199.77 crore in the corresponding quarter of the fiscal year 2017-18. He has now reported losses for the sixth consecutive quarter.
However, the employee unions at both IDBI Bank and LIC are opposed to the case.
The All India Bank Employees' Association (AIBEA) opposes the purchase by According to LIC, the government's stake in the bank would be reduced to less than 51%, this which is contrary to the badurance given to Parliament during the conversion of IDBI to the bank.
For its part, the largest union of the LIC, India. The Association of Insurance Employees (IAEA) opposes that the insurer invest money in IDBI Bank
"Acquiring a majority stake in IDBI Bank does not may not be only an investment decision, it is a decision to enter a totally new company. "We do not have the necessary expertise," said V. Ramesh, secretary general of AIIEA, in a letter to the president of the LIC
"The acquisition of IDBI Bank will not happen by the share capital of shareholders but by the savings of insured. "We are aware that LIC has long desired to enter banking, but we do not know how prudent it would be to enter the bank at a time when Indian banks are not cautious. very difficult period for well-known reasons, "said Ramesh.
But an industry representative told IANS that since LIC is already in housing finance and mutual funds, "a bank will be a good choice – a universal provider of financial services".
– IANS
vj / vd
(This story was not edited by Business Standard staff and is generated automatically from a syndicated feed.)
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