Roadshows in the US to sell IDBI Bank! Why not allow LIC to own it? By Thomas Franco | July 5, 2022https://www.cenfa.org/roadshows-in-the-us-to-sell-idbi-bank-why-not-allow-lic-to-own-it/
Though it has named IDBI Bank as a private bank, it is not really true because the government holds a 45.48% share in it while LIC, which is again a public sector undertaking, holds 49.24% in IDBI Bank.
In January 2019, LIC acquired a 51% stake in IDBI and took control of the bank. At Rs. 61 per share, LIC invested Rs. 21624 Cr. It again infused Rs. 4743 Cr from the policyholder’s fund. In two years, it nurtured the bank and made it a profitable bank. The bank also came out of the Prompt Corrective Action (PCA) of the RBI.
The idea of allowing banks into the insurance business was to convert banks into supermarkets for financial services instead of collecting deposits and giving loans. Bank + Assurance became Bank Assurance, and banks started subsidiaries for insurance, mutual funds, funds management, etc. Unfortunately, the government discriminated against LIC. While banks were allowed to compete with LIC in the insurance business, LIC was not allowed to compete in the banking business.
. Privatising and selling IDBI Bank to foreigners will be a crime. Converting development finance institutions into commercial banks itself was wrong. Now, selling it off will be worse. What we need are some changes in RBI and IRDAI guidelines, to enable LIC to own a bank. And the government can do this easily.