NewDelhi : The Union Cabinet on Tuesday approved the Infusion of Rs 4,557 crore by Government in IDBI Bank. It will help in completing the process of IDBI Bank’s turnaround and enable it to return to profitability and normal lending, and giving Government the option of recovering its investment at an opportune time.
“IDBI Bank needs a one-time infusion of capital to complete the exercise of dealing with its legacy book. It has already substantially cleaned up, reducing net NPA from peak of 18.8% in June 2018 to 8% in June 2019. The capital for this has to come from its shareholders. LIC is at 51% and is not allowed to go higher by the insurance regulator. Of the Rs. 9,300 crore needed, LIC would meet 51% (Rs. 4,743 crore). Remaining 49%, amounting to Rs. 4,557 crore, is proposed from Government as its share on one time basis” a government release said.
Following Cabinet’s approval in August 2018, LIC acquired 51% stake in IDBI Bank. Government continues to be a promoter and holds 46.46% stake.
After this infusion, IDBI Bank expects to be able to subsequently raise further capital on its own and expects to come out of RBI’s Prompt Corrective Action (PCA) framework sometime next year.
