IDBI Bank on Friday approved proposal for seeking shareholders’ nod for preferential issue of nearly 15 percent equity capital to LIC.
IDBI Bank-LIC merger: IDBI Bank on Friday approved proposal for seeking shareholders’ nod for preferential issue of nearly 15 percent equity capital to LIC. It will eventually lead to acquisition of 51 percent shareholding by the country’s largest insurer in the PSU bank. Currently, LIC holds 7.98 percent stake in IDBI Bank. The board of directors approved the proposal through postal ballot.
“In continuation of our earlier disclosure dated August 28, 2018, it is hereby informed that the Board of Directors have approved the proposal for seeking shareholders’ approval through Postal Ballot under section 62(1)(c) of the Companies Act, 2013 for the Preferential Issue of Equity Capital to Life Insurance Corporation of India (LIC) aggregating upto 14.90% of the Bank’s post issue paid up capital,” IDBI Bank said in an exchange filing.
On August 28, the public sector lender had informed the bourses that it will consider seeking approval of shareholders for preferential issue to LIC, aggregating up to 14.90 percent of post issue paid up capital, at its board meeting scheduled today.
Meanwhile, the central government has already given approval to 51 percent transfer of shareholding in IDBI Bank to LIC. However, it will first require approvals from the insurance regulator IRDAI as well as the central bank in this regard. The government holds 85.96 percent stake in IDBI Bank.
With country’s largest insurer issuing in principle approval for equity shares subscription, the first step towards taking majority ownership in IDBI Bank has already been taken.
The IDBI Bank shares have rallied 30 percent till date from the lows recorded in the month of July. The debt-ridden public sector bank posted a loss of Rs 2,409.89 crore for the Q1 ended June due to higher provisioning for non-performing assets (NPAs). A loss of Rs 853 crore was reported by the PSU bank in April-June quarter of 2017-18.
The shares of IDBI Bank were trading at Rs 62.15 up 2.05 percent on BSE at the time of reporting.