In a major development, the Life Insurance Corporation is said to have taken over formally a controlling stake in IDBI Bank.
The LIC now has a 51 per cent stake in the bank and is the majority shareholder.
The increase in IDBI Bank stake by LIC will help the insurance major enter the banking space.
In its statement on Monday, the bank said that improved financial health will pave the way for the bank to exit from the central bank’s prompt corrective action (PCA) plan in a time-bound manner.
This comes as eleven banks with high bad debts are under the Reserve Bank of India’s PCA framework that prohibits them from further lending.
IDBI Bank and LIC have started working to ensure full realisation of their synergies over the next 12 months, it added.
The deal was cleared by the government in August, and approved by the bank’s shareholders in October last year.
At the end of the December quarter, LIC held a 44.3 per cent stake in IDBI Bank.