LIC Plans To Retain Stake In IDBI Bank For Bancassurance Gains

State-owned LIC, the promoter of IDBI Bank, has outlined plans to retain a portion of its stake in the bank to leverage the advantages of bancassurance. LIC Chairman Siddhartha Mohanty stated that while both the government and LIC will divest some of their stakes in IDBI Bank, they do not intend to exit completely. 

IDBI Bank has been identified as the primary partner for bancassurance, and LIC aims to maintain a stake to ensure the continuity of this partnership. Bancassurance is a collaboration between a bank and an insurance company, allowing the latter to sell its products through the bank's branch network.

The government, holding over 45 per cent of IDBI Bank, and LIC, with a 49.24 per cent share, have jointly decided to divest a 60.7 per cent stake. Despite the reduction in LIC's shareholding to 49.24 per cent, following a qualified institutional placement (QIP) by the bank, IDBI Bank continues to be a subsidiary of LIC.

LIC recognises IDBI Bank's significant contribution to the bancassurance channel and Siddhartha Mohanty emphasised that LIC may not need to hold the entire stake for the bancassurance arrangement to persist. 

He addressed concerns about LIC's share price post-listing, expressing the company's commitment to creating shareholder value through various means, including changes to product and channel mix, and increased digital intervention.

The stake sale in IDBI Bank, while on course, faces considerations such as compliance with the RBI's fit and proper criteria. Tuhin Kanta Pandey, Secretary of the Department of Investment and Public Asset Monetisation (DIPAM), indicated that the sale might not be concluded by March 2024. LIC conducted a non-deal roadshow in the US, UK, Singapore and Hong Kong to instill confidence among foreign investors, receiving positive responses. 

LIC aims to create shareholder value and attract interest from investors through strategic initiatives and quarterly performance.