New Delhi: The Reserve Bank of India (RBI) has categorised IDBI Bank as a private sector lender after the acquisition of a majority stake by Life Insurance Corporation (LIC), the Central bank said. LIC had picked up a controlling 51 percent stake in the beleaguered bank in January.
"IDBI Bank has been categorised as a 'private sector bank' for regulatory purposes by Reserve Bank of India with effect from January 21, 2019 consequent upon LIC acquiring 51 percent of the total paid-up equity share capital of the bank," the RBI said in a statement.
By virtue of being under the prompt corrective action framework, IDBI Bank has been banned from corporate lending and branch expansions, salary hikes and other regular activities.
The bank has charted out a revival strategy to tide over the crisis and bring banking and insurance under one roof, along with its new owner LIC. Last week, IDBI Bank had made public the decision to appoint LIC as a corporate agent under the bancassurance channel.
The long-term plan
In future, IDBI and LIC will have a common investment strategy, use each other's resources like real estate, commercial and residential space, bank branches, premises and ATMs and digital marketing, among others, the bank said. According to the plan, both IDBI and LIC will undertake rationalisation of their common subsidiaries in mutual funds and life insurance arms.
The December quarter of the current fiscal saw IDBI's loss widening to Rs 4,185.48 crore as bad loans surged. The lender's bad loans went up to 29.67 percent of the gross advances in the quarter that ended on December 31.