LIC increases stake in Bank of Maharashtra

The Life Insurance Corporation of India (LIC) is increasing its exposure to banks.

The state-owned insurer wants to exploit the synergies between insurance and banking sectors by hiking its stake in commercial banks.

It has recently almost doubled its holding in Bank of Maharashtra (MahaBank) to over 2 per cent, from the earlier 1.09 per cent.

Senior LIC officials said the stake taken in MahaBank is "purely an investment decision, and not a strategic investment".

The corporation is on prowl to pick up an additional stake in Bank of Maharashtra. S C Bhargava, executive director (investment), LIC is one of the candidates who could be elected to the board as a shareholder. This is even as LIC holds just about 2 per cent stake in the bank.

MahaBank 's election will be held at the extraordinary general meeting on January 7.

Should Bhargava get elected to the board, this will be the third bank where LIC has a director on the board. The corporation has a nominee director "" R Vashishtha "" on Corporation Bank board, and will shortly also have a nominee "" R B L Vaish, ED (finance & accounts) "" on the board of UTI Bank. LIC holds 26.32 per cent stake in Corporation Bank and little less than 14 per cent in UTI Bank.

Market analysts feel that LIC increasing stake and having a nominee director on MahaBank board hints at a bigger plan of the corporation in the banking sector. It had earlier increased its holding in other public sector banks such as Allahabad Bank, Vijaya Bank and UCO Bank.

LIC holds about 10 per cent in ICICI Bank, 5 per cent in State Bank of India, 6.37 per cent in IDBI Bank, about 5 per cent in HDFC Bank, and about 2 per cent in Dena Bank, Syndicate Bank, Bank of Baroda and Bank of India. In these banks, LIC does not have any board representation despite a significant stake.

The corporation will make additional investment of 15-20 per cent in selected banks, including private sector banks, said LIC sources.