IDBI Bank expects to divest stake in its insurance joint venture IDBI Federal Life Insurance Company by September-end this year, according to MD & CEO Rakesh Sharma.
Sharma said the Covid-19 situation delayed the divestment process. However, negotiations to finalise the deal are on.
IDBI Bank has 48 per cent stake in IDBI Federal Life Insurance Company, which started operations in 2008. Federal Bank and Ageas Insurance International N.V. have 26 per cent stake each.
Ajay Sharma, ED & CFO, IDBI Bank, said the bank is servicing the policies of the life insurance company sold by it. However, it is not selling the company’s policies which are also in Life Insurance Corporation of India’s (LIC) bouquet.
During the financial year 2018-19, LIC acquired 51 per cent controlling stake in IDBI Bank. The process of acquisition was completed on January 21, 2019, with LIC being re-classified as promoter of the bank (with management control) and Government of India continuing to be the co-promoter (without management control).
As per insurance regulations, an insurer cannot own more than 10 per cent stake in another insurer. Since LIC owns 51 per cent stake in IDBI Bank and the latter owns 48 per cent stake in IDBI Federal Life Insurance Company, the bank has to divest its stake in its insurance joint venture.
It is not clear if IDBI Bank will completely divest its stake in its insurance joint venture or retain 10 per cent stake.
Meanwhile, the CFO said 75,000 accounts, including MUDRA accounts, with the bank with an aggregate exposure of ₹8,500 crore will be eligible for additional loans under the emergency credit line guarantee scheme. So, the bank can extend loans aggregating ₹1,700-1,800 crore to these borrowers under the scheme.
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Published on
May 30, 2020
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