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As part of strategic disinvestment, govt, LIC to sell stakes in Bank

Quantum of stake sale to be decided while structuring the transaction

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CCEA | Life Insurance Corporation | IDBI Bank

A K Antony  |  Delhi 

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As part of strategic disinvestment, govt, LIC to sell stakes in IDBI Bank

The Cabinet Committee on Economic Affairs (CCEA) has approved strategic disinvestment along with transfer of management control in IDBI Bank, paving the way for both the government, and Life Insurance Corporation of India (LIC) to reduce their shareholding in the lender.

LIC’s Board has passed a resolution to reduce its shareholding in the bank along with government’s stake sale plan “with an intent to relinquish management control and by taking into consideration price, market outlook, statutory stipulation and interest of policy holders.”

The government holds 45.48 per cent in IDBI Bank, while LIC holds 49.24 per cent. The quantum of stake dilution of both government and the insurer will be decided while structuring the deal, in consultation with RBI. The decision of LIC’s board is also in line with the Insurance Regulatory and Development Authority of India’s mandate to reduce its stake in IDBI Bank below 15 per cent, said a statement by the government.

The approval from the cabinet will give Department of Investment and Public Asset Management (DIPAM) the authority to move ahead with the divestment process, and appoint intermediaries for the sale.

The strategic buyer will have to infuse funds, new technology and implement best management practices for growth of IDBI Bank. The new buyer will have to generate more business without any dependence on LIC and government’s assistance for funds, said the statement.

First Published: Wed, May 05 2021. 17:29 IST