IDBI Bank has been categorised as a private sector lender following acquisition of majority stake by Life Insurance Corporation.
According to a statement from RBI, LIC completed the process of picking up a controlling 51% stake in the nearly crippled IDBI Bank in January. IDBI Bank has been categorised as a ‘private sector bank’ for regulatory purposes by Reserve Bank of India with effect from 21 January 2019 consequent upon LIC acquiring 51% of the total paid-up equity share capital of the bank.
IDBI Bank has been under the prompt corrective action framework of RBI that bans it from corporate lending and branch expansions, salary hikes and other regular activities. However, the lender has charted out a revival strategy to bring banking and insurance under one roof, along with its new owner Life Insurance Corporation (LIC). Last week, IDBI Bank informed about appointment of LIC as a corporate agent under bancassurance channel.
In the long term, the bank and LIC will have a common investment strategy, use each other’s resources like real estate, commercial and residential space, bank branches, premises and ATMs and digital marketing, among others. Both entities will also undertake rationalisation of the common subsidiaries in mutual funds and life insurance arms, as per the strategic plan.