The government is considering selling over 40 per cent of its stake in IDBI Bank to state-run Life Insurance Corporation (LIC), sources have told NDTV.
The government, which is the largest shareholder in IDBI Bank with 81 per cent stake, is likely to make around Rs 10,000-11,000 crore by selling up to 43 per cent, the sources say.
Insurance major LIC is the biggest public shareholder in IDBI Bank, with a stake of 10.82 per cent as of March.
IDBI Bank’s board of directors will draw a capital-raising plan for next five years, it is learnt. The board of directors of LIC will discuss taking majority control in IDBI Bank after approval from the government, officials say.
Earlier this week, State Bank of India (SBI) managing director B Sriram was appointed IDBI Bank’s interim CEO and managing director for three months. Mahesh Kumar Jain, who was brought in as the bank’s CEO and managing director last year to tackle its bad loan crisis, has been appointed deputy governor of the Reserve Bank of India for a term of three years.
The government has been trying for some time to sell IDBI, which has the highest bad-loan ratio among state-run lenders in India. India Ratings & Research Pvt., the local unit of Fitch, downgraded IDBI Bank this month.
According to the bank’s latest report, its bad loans stand at Rs. 55,588 crore, up from Rs. 44,753 crore in March 31, 2017. The Central Bureau of Investigation (CBI) is probing a Rs. 600-crore loan fraud case involving IDBI Bank.