IDBI Banks Board Approves 27 Per Cent Stake Sale In IDBI Federal Life Insurance Company
Money & Banking
Ageas and Federal Bank will increase their stake in IFLI by 23 per cent (to 49 per cent) and 4 per cent (to 30 per cent), respectively with IDBI Bank having 21 per cent stake in IFLI, post-stake sale
IDBI Bank’s Board of Directors has approved sale of a portion of the Bank’s 48 per cent stake in IDBI Federal Life Insurance Company Limited (IFLI) to current joint venture partners Ageas Insurance International N.V. and Federal Bank at a combined value of about Rs.595 crore.
Ageas and Federal Bank will increase their stake in IFLI by 23 per cent (to 49 per cent) and 4 per cent (to 30 per cent), respectively. Post-stake sale, IDBI Bank will have 21 per cent stake in IFLI.
IDBI Bank’s board greenlighted the sale at its meeting held on June 26, 2020.
The sale is subject to all regulatory approvals to be taken by all related parties and agreements which are yet to be finalised, the Bank said in a regulatory filing.
Reason for disinvestment
During the financial year 2018-19, the Life Insurance Corporation of India (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 of the Bank (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.
Since IDBI Bank will continue to hold more than 10 per cent stake even after the current round of divestment in IFLI, the Bank and its promoter LIC may have to seek dispensation from the insurance regulator in this regard.
Published on
June 27, 2020
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Ageas and Federal Bank will increase their stake in IFLI by 23 per cent (to 49 per cent) and 4 per cent (to 30 per cent), respectively with IDBI Bank having 21 per cent stake in IFLI, post-stake sale
IDBI Bank’s Board of Directors has approved sale of a portion of the Bank’s 48 per cent stake in IDBI Federal Life Insurance Company Limited (IFLI) to current joint venture partners Ageas Insurance International N.V. and Federal Bank at a combined value of about Rs.595 crore.
Ageas and Federal Bank will increase their stake in IFLI by 23 per cent (to 49 per cent) and 4 per cent (to 30 per cent), respectively. Post-stake sale, IDBI Bank will have 21 per cent stake in IFLI.
IDBI Bank’s board greenlighted the sale at its meeting held on June 26, 2020.
The sale is subject to all regulatory approvals to be taken by all related parties and agreements which are yet to be finalised, the Bank said in a regulatory filing.
Reason for disinvestment
During the financial year 2018-19, the Life Insurance Corporation of India (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 of the Bank (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.
Since IDBI Bank will continue to hold more than 10 per cent stake even after the current round of divestment in IFLI, the Bank and its promoter LIC may have to seek dispensation from the insurance regulator in this regard.
Published on
A letter from the Editor
Dear Readers,
The coronavirus crisis has changed the world completely in the last few months. All of us have been locked into our homes, economic activity has come to a near standstill.
In these difficult times, we, at BusinessLine, are trying our best to ensure the newspaper reaches your hands every day. You can also access BusinessLine in the e-paper format – just as it appears in print. Our website and apps too, are updated every minute.
But all this comes at a heavy cost. As you are aware, the lockdowns have wiped out almost all our entire revenue stream. That we have managed so far is thanks to your support. I thank all our subscribers – print and digital – for your support.
I appeal to all our readers to help us navigate these challenging times and help sustain one of the truly independent and credible voices in the world of Indian journalism. You can help us by subscribing to our digital or e-paper editions. We offer several affordable subscription plans for our website, which includes Portfolio, our investment advisory section.
Our subscriptions start as low as Rs 199/- per month. A yearly package costs just Rs. 999 – a mere Rs 2.75 per day, less than a third the price of a cup of roadside chai..
A little help from you can make a huge difference to the cause of quality journalism!
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