New Delhi: The Union Cabinet has approved conveying of no objection to reduction in government's shareholding in IDBI Bank Limited to below 50 percent by dilution.
It has also approved acquisition of controlling stake by Life Insurance Corporation of India (LIC) as promoter in the bank through preferential allotment / open offer of equity, and relinquishment of management control by the Government in the bank.
Post the transaction, IDBI Bank would become a subsidiary of LIC and the insurer would have 51 percent stake. Currently, LIC holds 7.98 percent stake in the debt-ridden public sector bank.
“Benefits to the two entities emanate from economies of scale, reduction in the costs of distribution and customer acquisition, greater efficiency and flexibility in operations, and greater opportunity for cross-selling of products and services,” an official release said.
“These would help financially strengthen both LIC and the bank, as well as their subsidiaries which offer financial products such as housing finance and mutual funds. Further, the bank would get an opportunity to tap 11 lakh LIC agents for doorstep banking services, positioning it to improve customer services and deepen financial inclusion,” it added.
