MUMBAI - India's insurance regulator has allowed the country's largest state-run insurer Life Insurance Corporation (LIC) to buy a stake of up to 51 percent in state-owned lender IDBI Bank, according to media reports on Friday.
The Insurance Regulatory Authority of India (IRDA) also approved the exemption of the deal from a rule capping investments by insurance companies at 15 percent in any other entity, ET Now television channel reported, citing sources.
IDBI, which has the highest bad-loan ratio among Indian banks, is one of the 11 troubled lenders identified by the Reserve Bank of India under a so-called prompt corrective action plan that includes restricting branch expansion and lending.
The media reports added that the IRDA board had also allowed LIC to invest between 100 billion rupees ($1.46 billion)and 130 billion rupees in IDBI, where its holding was 10.82 percent as of the end of March.
The government holds 80.96 percent of the bank and has said it is open to ceding control by paring its holding. Earlier on Friday IDBI Bank, in a clarification to media reports, said its board had not discussed any investment plans by LIC.