A day after central government gave its approval to LIC-IDBI Bnak merger, the debt-laden bank said that an approval is being awaited in this regard, IDBI Bank clarified in an exchange filing today. The Cabinet on Wednesday had given approval to the government’s decision to reduce its stake in IDBI Bank below 50 percent and LIC raising stake to 51 percent, paving way for LIC to acquire majority stake in the public sector bank.
“We advise that, vide Bank’s earlier letter dated July 17, 2018, it was informed that LIC’s proposal for acquisition of 51% controlling stake in IDBI Bank as Promoters was referred to GoI for their decision. We are awaiting GoI’s approval in this regard and shall disclose to Stock Exchanges on receipt of the same. You are requested to kindly take the above intimation on record in terms of the provisions of Regulation 30 of SEBI (LODR) Regulations, 2015,” IDBI Bank said in an exchange filing.
LIC, which holds 7.98 percent in IDBI Bank, will have control of the state-run lender and get the status of a promoter once the deal is sealed completely.
Backed by the government, LIC will seek a “special dispensation” from the RBI to give the insurance behemoth some time to reduce its stake in some other banks, including Axis Bank and PNB, to below 10 percent to meet a regulatory requirement, Financial Express reported citing an unidentified source.
The deal will involve preferential allotment of shares to LIC by the stressed bank, instead of an outright sale of the government’s stake in the bank to the insurance behemoth. An open offer by country’s largest insurer could also come into place, though the public shareholding is small, Financial Express reported citing an unidentified source.