Insurance regulator Insurance Regulatory and Development Authority of India (IRDAI) is seeking Life Insurance Corporation of India’s proposal for paring its shareholding in IDBI Bank.
IRDAI specify that insurers are permitted to hold only up to 15 percent stake in any listed entity. However, LIC, with a special dispensation from IRDAI, is allowed to hold more than the limit in some state-run banks.
Moreover, the Reserve Bank of India (RBI) allows a bracket of 15 percent for promoter stake in a private sector bank.
“We will decide on the timeline (for stake reduction by LIC in IDBI Bank). We are not leaving it to them. I have asked them (LIC) to give a proposal and after that we will take a decision,” said Subhash Chandra Khuntia, Chairman, IRDAI.
Last year in June, IRDAI allowed LIC to hold up to 51 perent stake in debt-ridden lender IDBI Bank. On December 28, LIC invested around Rs 14,500 crore into the bank in alignment to the takeover, following which it again injected another Rs 5,030 crore on January 21.
As a result, LIC gained 51 percent controlling stake in the bank, making the insurer the lender’s majority shareholder.
