LIC’s Management Control over IDBI Bank

It is known that LIC of India has already claimed a 51% stake in IDBI Bank.  LIC has now said that it is interested to take a controlling 51% per cent in the bank.  This has been discussed with the management as per details available.

  1. This means, the rights to be given would include nominees on the board of the ailing bank, and influence strategy.
  2. Also, LIC wishes to take stake via preferential allotment of shares or open offer. The valuation however would depend on the method which is selected for the purpose.
  3. At present Government owns 85.96 per cent of IDBI whereas LIC has 7.98 per cent stake at the end of June this year.
  4. It is further learnt through Government resources that it would take around five to six months for IDBI to obtain all regulatory approvals after which the Preferential shares could be issued.
  5. It is necessary that
    1. the bank amends its Articles of Association
    2. Union Cabinet approves reduction of Government’s stake below 51 per cent which would take about a month.
    3. IDBI should take clearance from its other shareholders, RBI and SEBI. Bank would be required to issue a postal ballot notice and hold a separate General Body meeting of the stake holders.
  6. Already the bank has obtained approval of the shareholders to raise Rs. 50 billion by way of issuing new shares through various routes including Qualified Institutional Placement.
  7. August 13, 2018 is the date slated for IDBI’s Annual General Body meeting.

Author: Admin Bankedge

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