LIC to be reclassified as public shareholder in IDBI Bank post-disinvestment

The Securities and Exchange Board of India (SEBI) has cleared the reclassification of the Life Insurance Corporation of India (LIC) as a public shareholder in IDBI Bank, a move that paves way for the lender’s strategic disinvestment. The approval, which comes with a set of conditions, will take effect once the transaction is completed.

In a regulatory filing on August 24, LIC said the Department of Investment and Public Asset Management (DIPAM) had informed it of SEBI’s approval, received a day earlier. The decision is a crucial step in the government’s plan to privatise IDBI Bank, which was cleared by the Cabinet Committee on Economic Affairs in May 2021.

According to the conditions laid down by SEBI, LIC’s voting rights in IDBI Bank will be capped at 10 per cent, and the insurer will not be allowed to exercise control over the lender’s management or operations. LIC will also have no representation on the board, either through nominee directors or its key managerial personnel. Further, the Reserve Bank of India has directed that LIC reduce its stake in IDBI Bank to 15 per cent or below within two years of the disinvestment.