SEBI approves LIC as public shareholder of IDBI Bank

SEBI approves LIC as public shareholder of IDBI Bank

It is subject to curbs on voting rights and Board representation

The Securities and Exchange Board of India (SEBI) has given consent to categorise Life Insurance Corporation of India (LIC) as a public shareholder of IDBI Bank.

In a filing with the Bombay Stock Exchange (BSE), Mumbai-based IDBI Bank stated that the Department of Investment and Public Asset Management (DIPAM) had informed that the market regulator had given its approval.

However, the LIC would have to fulfil a condition that its voting rights shall not exceed 10 percent of the voting rights of IDBI. This means that LIC cannot (directly or indirectly) exercise control over the bank’s affairs.

Additionally, it will not have any special rights relating to IDBI, through any arrangement, including shareholders’ agreements. And won’t have representation, including nominees, on the Board of Directors.

In case the insurer fails to comply with any of the specified conditions, the reclassification of LIC as a ‘public’ shareholder post disinvestment would stand withdrawn automatically.

Meanwhile, post-completion of the disinvestment transaction, LIC must bring down residual shareholding in IDBI to 15 percent or below within two years as directed by the Reserve Bank of India (RBI).

Together with the Central government, LIC holds 95 percent stake in IDBI, of which 60.72 percent is on the block.

As qualified bidders have begun due diligence, by September, the exercise will be over.