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IRDAI to set timeline for LIC to cut stake in IDBI Bank to 15%

Saturday, September 08, 2018

The Insurance Regulatory and Development Authority of India (IRDAI) yesterday said it will set the timeline to reduce LIC's shareholding in IDBI Bank from 51% to 15%. However, it added that the timeline will only be set after looking at LIC's business plan post acquisition of 51% stake in debt-ridden IDBI Bank.

LIC currently holds 7.98% in debt-ridden IDBI Bank, and is in the process of increasing its stake to 51%, which would help it enter the banking space. The insurance regulator in

June had permitted LIC to increase its stake to 51% in IDBI Bank. The government, which currently holds 85.96% in IDBI Bank, had also approved the LIC's proposal to hike stake last month.

"We will look at their (LIC's) business plan (post acquisition of 51% stake in IDBI Bank) and then decide on reduction of its stake in IDBI Bank (to 15%)," IRDAI chairman S C Khuntia told reporters on the sidelines of an insurance summit organised by Assocham in Mumbai.

The permissible limit for insurance companies to hold stake in any listed entity is 15% at present. "LIC will have to safeguard the interest of policyholders while reducing it's stake in the bank," he said.

On Tuesday, the LIC board had said it has taken a decision on the modalities of increasing stake in IDBI Bank to 51%. The national insurer is also in the process of picking up an additional 7% stake in IDBI Bank through preference shares. With this, its total holding in the bank would rise to 14.9%, from 7.98% at present.

The All India IDBI Officers Association (AIIOA) had challenged the LIC's move to acquire 51% stake in IDBI Bank in the Delhi High Court. It has also sought withdrawal of the approval given by the IRDAI to the transaction.

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