The central government is considering a combination of issue of fresh shares and sale of equity to Life Insurance Corporation of India in the debt-ridden IDBI Bank. This is to ensure that post-sale of the equity, LIC’s equity holding in the bank would remain below 50%. The proposal will help the government to meet its disinvestment target of Rs 80,000 crore and at the same time bring in funds for the troubled bank, which has NPAs equivalent to more than 28% of its advances. The bank is already under the prompt corrective action of the RBI. LIC has expressed interest in acquiring a significant stake in the bank as part of its plan to enter the banking business. The government is also proposing to sell the non-core assets of the bank and appoint a professional board to lead the bank back to health.
