IDBI Bank’s proposal for a name is not being favoured by the Reserve Bank of India (RBI), according reports. The IDBI Bank board had proposed the changing the name of the lender to either LIC Bank or LIC IDBI Bank. This change was suggested after LIC acquired a 51% stake in the bank on January 21, thereby becoming the majority shareholder. It was this change of names that was not favoured by the RBI. One of the other reasons why the name change was opposed by the RBI was that the change of names would require clearance from the Ministry of Corporate Affairs, shareholders, stock exchanges and other bodies.
In January 2019, the insurance company, LIC completed the acquisition of 51 percent of the controlling stake in IDBI Bank and marking its entry in the banking space. LIC has been in the insurance trade for more than 60 years.
In August 2018, the Cabinet had approved the acquisition of the controlling stake by Life Insurance Corporation (LIC) as a promoter in the bank. This was done through a combination of open offer of equity and preferential allotment. LIC has been trying to make an entry and this was finally done by acquiring the majority stake in IDBI Bank. The deal between LIC and IDBI Bank is expected to provide business synergies inspite of the lender’s balance sheet being quite stressed.
In the third quarter ending on December 2018, IDBI Bank posted a widening of losses by nearly threefold to Rs 4,185.48 crore due to the increase of bad loans. It had also reported a net loss of Rs 1,524.31 crore in the previous fiscal year. The total income of the bank decreased to Rs 6,190.94 crore for the quarter when compared to Rs 7,125.20 crore in the corresponding quarter in 2018.
