The much in distress Industrial Development Bank of India (IDBI) may see a large buyout of its shares by the Life Insurance Corporation of India (LIC), following a bid by the latter to secure up to 43% stake in the bank for about 10,500 crore rupees. LIC already holds an 8% stake in the bank, but is interested in acquiring a majority, or controlling share as it sees this one way in which it can ease into its planned foray into the Indian banking sector. The LIC board has already okayed these plans, and now it will require the government to provide its decision to allow for this sale to go ahead. This potential sale comes in the wake of the governments attempts for a couple of years now, to privatise the bank, as the losses have been mounting during this period.
At the moment, IDBI has the dubious distinction of holding on to the highest amount of non-performing assets (NPA) that is valued at upwards of 55,588-crore rupees. Going on a more recent trend of several other state-owned or state-controlled banks finding themselves with massive NPAs, as well as some of them being afflicted by scandals that number in the thousands of crores in value, the sale to LIC is expected to be a boon for the government as far as its banking systems go. The cabinet is expected to give the permission for this sale to take place, although there has been no indication as to how soon this will take place.