MUMBAI:In a new twist to the proposed LIC-IDBI Bank deal, the lender’s interim boss B Sriram has said the insurer will have management control in the bank. Till now, it was believed LIC would acquire 51 per cent in the bank but remain a strategic investor.
Speaking to reporters here on Tuesday, Sriram said LIC would have a controlling stake with promoter status. “Having controlling stake will mean LIC will have a larger role to play. IDBI Bank will get capital infusion… the intent is clear… to take management control.”
However, it may hit regulatory hurdles; multiple sources told TNIE that Irdai rules do not allow insurers to gain management control in other firms, unless they are subsidiaries.Curiously, LIC had got Irdai nod on the premise the stake would be pared to below 15 per cent over time.To have controlling stake, LIC needs to make IDBI a subsidiary and the Articles of Association needs to be amended. “That’s unlikely,” said a source.LIC couldn’t be reached for comments.
It is still unclear if Irdai allowed LIC to gain management control and if RBI, which had refused LIC a banking licence in the past, would allow it to get into the driver’s seat at IDBI.Meanwhile, the IDBI board on Tuesday considered LIC’s proposal but decided to wait for the government’s view on the stake sale and whether it should be a preferential share allotment or an open offer.