IDBI Bank expects to divest stake in its insurance coverage three way partnership IDBI Federal Life Insurance coverage Firm by September-end this 12 months, based on MD & CEO Rakesh Sharma.
Sharma mentioned the Covid-19 scenario delayed the divestment course of. Nevertheless, negotiations to finalise the deal are on.
IDBI Bank has 48 per cent stake in IDBI Federal Life Insurance coverage Firm, which began operations in 2008. Federal Bank and Ageas Insurance coverage Worldwide N.V. have 26 per cent stake every.
Ajay Sharma, ED & CFO, IDBI Bank, mentioned the bank is servicing the insurance policies of the life insurance coverage firm offered by it. Nevertheless, it isn’t promoting the corporate’s insurance policies that are additionally in Life Insurance coverage Company of India’s (LIC) bouquet.
In the course of the monetary 12 months 2018-19, LIC acquired 51 per cent controlling stake in IDBI Bank. The method of acquisition was accomplished on January 21, 2019, with LIC being re-classified as promoter of the bank (with administration management) and Authorities of India persevering with to be the co-promoter (with out administration management).
As per insurance coverage rules, an insurer can’t personal greater than 10 per cent stake in one other insurer. Since LIC owns 51 per cent stake in IDBI Bank and the latter owns 48 per cent stake in IDBI Federal Life Insurance coverage Firm, the bank has to divest its stake in its insurance coverage three way partnership.
It’s not clear if IDBI Bank will utterly divest its stake in its insurance coverage three way partnership or retain 10 per cent stake.
In the meantime, the CFO mentioned 75,000 accounts, together with MUDRA accounts, with the bank with an mixture publicity of ₹8,500 crore will probably be eligible for extra loans underneath the emergency credit score line assure scheme. So, the bank can lengthen loans aggregating ₹1,700-1,800 crore to those debtors underneath the scheme.
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