The LIC board today gave approval to the insurance behemoth for acquiring of up to 51 per cent stake in IDBI Bank, Economic Affairs Secretary S C Garg said today.
Now the state-owned Life Insurance Corporation of India (LIC) will approach markets regulator Sebi.
Insurance regulator Irdai has already given its approval to the insurer for the stake purchase.
Garg said the board, which met here, approved LIC buying up to 51 per cent stake in IDBI Bank.
LIC stake buy will help the debt-ridden state-owned bank get a capital support of Rs 10,000- 13,000 crore.
LIC has been looking to enter the banking space by acquiring a majority stake in IDBI Bank as the deal is expected to provide business synergies despite the lender's stressed balance sheet.
It will get about 2,000 branches through which it can sell its products, while the bank would get massive funds of LIC.
The bank would also get accounts of about 22 crore policy holders and subsequent flow of fund.
Once the deal goes through, IDBI Bank, which is grappling with mounting toxic loans with gross non-performing assets rising to a staggering Rs 55,600 crore at the end of the March quarter, will get much needed capital support to revive its fortune.
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