The Reserve Bank of India (RBI) has given its approval to the LIC-IDBI Bank deal and the stressed bank is learnt to have received around Rs 6,000 crore from the insurance behemoth as the first instalment for the proposed acquisition of a majority stake, sources told FE.
Since the government and other regulators like Sebi and Irdai have already cleared the deal and the Delhi High Court this week rejected a plea by All India IDBI Officers Association against the move, the stage is set for LIC to complete its acquisition of up to 51% in the bank this fiscal itself, they added. The total value of the deal is expected to be around Rs 12,000-13,000 crore.
“RBI has deemed LIC fit and proper to run a bank,” said one of the sources. An email sent on Wednesday to both IDBI Bank and LIC on the insurer’s first instalment of money transfer remained unanswered until the paper went to press.
Thanks to LIC’s acquisition and consequent infusion of money, the government won’t have to provide more capital this fiscal for IDBI Bank, which had received the highest amount of infusion in FY18, said a senior official. This leaves the scope for some other stressed banks to get more government capital from the proposed infusion of `65,000 crore this fiscal.
Already, IDBI Bank said on Tuesday that it has received final letter from LIC for an open offer to acquire additional 26% in the lender.
The Cabinet Committee on Economic Affairs had in August approved the deal. Once the acquisition is completed, LIC —which held 7.98% in IDBI Bank prior to the deal — will have control of the state-run lender and get the status of a promoter. The government, which held 85.96% in IDBI Bank as of June 30, will see its stake diluted to around 44%, finance ministry officials had said earlier.