IDBI Bank categorised as a private sector bank by RBI

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IDBI Bank has been categorised as a private sector lender by the Reserve Bank of India after LIC acquired a controlling stake in the bank. In January 2019, LIC completed acquiring a 51% stake in IDBI Bank. Thus, for regulatory purposes, the RBI has changed the categorisation of the bank from a public sector lender to a private sector lender, effective 21 January 2019.   

Bank
IDBI Bank has been categorised as a private sector bank by the Reserve Bank of India, given that LIC has acquired a majority stake in the bank. This change in its categorisation is effective from 21 January 2019.

The Reserve Bank of India has placed IDBI Bank under a corrective action framework that bans the lender from undertaking branch expansion activities, corporate lending, salary hikes, etc. The lender, however, has developed a revival plan along with LIC to bring its banking services and insurance services under one platform.  

Earlier this month, IDBI Bank announced that Life Insurance Corporation (LIC) of India will be its corporate agent. Over the course of time, LIC and IDBI Bank are expected to have a shared investment strategy and use one another’s resources. 

For the quarter that ended in December 2018, IDBI Bank’s losses widened to Rs.4,185.48 crore due to the increase of bad loans. In comparison, the lender has registered a net loss of Rs.1,524.31 crore in December 2017. The lender’s gross NPAs or non-performing assets increased to 29.67% of the gross advances during the period under review, in comparison to gross NPAs of 24.72% in the year-ago period.  

IDBI Bank’s shares rose after it was announced that the bank has been categorised as a private sector lender.  

Source: The Times of India, Livemint, Business Standard 

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