August 1, 2018 / 12:32 PM / a year ago

Indian cabinet approves planned takeover of IDBI Bank by LIC

NEW DELHI, Aug 1 (Reuters) - India’s federal cabinet on Wednesday approved a planned takeover of state-run IDBI Bank by state-run Life Insurance Corp through sale of new shares in the lender, Finance Minister Piyush Goyal said.

LIC, which already owns about 8 percent of IDBI, is set to raise its stake in the bank to 51 percent and will gain management control under a plan approved by both the companies.

After final approval from the insurance regulator, LIC will do due diligence and subscribe to new shares in IDBI, Goyal said, adding the government’s stake in the bank will come down to about 45 percent after that deal.

The federal government currently owns about 86 percent of IDBI, which has the highest bad-loan ratio among Indian banks.

The LIC bid is aimed at helping IDBI get capital to set aside for bad loans and grow its lending. (Reporting by Devidutta Tripathy; Editing by Malini Menon)

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