The Union Cabinet chaired by Prime Minister Narendra Modi has approved the purchase of 51 per cent controlling stake in IDBI Bank by state-run insurer Life Insurance Corporation (LIC).
The decision also conveyed no objection to reduction in government of India shareholding in IDBI Bank Limited to below 50% by dilution.
It has also approved acquisition of controlling stake by Life Insurance Corporation of India (LIC) as promoter in the bank through preferential allotment/open offer of equity, and relinquishment of management control by the government in the bank.
According to the statement, the impact of acquisition has wide-ranging synergy benefits for customers, LIC and the bank, as it will benefit the two entities. The move will benefit them from economies of scale, reduction in the costs of distribution and customer acquisition, greater efficiency and flexibility in operations, and greater opportunity for cross-selling of products and services, it said.
These would help financially strengthen both LIC and the bank, as well as their subsidiaries which offer financial products such as housing finance and mutual funds. Further, the bank would get an opportunity to tap 11 lakh LIC agents for doorstep banking services, positioning it to improve customer services and deepen financial inclusion, the statement said