IDBI Bank Ltd.'s board of directors approved Life Insurance Corp. of India's bid to gain an additional 7% ownership in the bank through a preferential issuance.
With the approval of its board, IDBI Bank may execute a preferential issue of equity capital to the state-owned life insurer, aggregating up to 14.90% of the bank's post-issue paid-up capital. Life Insurance Corp. of India currently owns 7.98% of the bank.
The issuance is part of a government-approved proposal under which Life Insurance Corp. of India will take a 51% controlling stake in IDBI Bank. Through the first round of stake sale, IDBI Bank may be able to meet capital adequacy norms at the end of the second quarter, the Press Trust of India reported.