LIC to reduce IDBI Bank stake while maintaining strategic partnership

  • Stock Market News
LIC to reduce IDBI Bank stake while maintaining strategic partnership
Credit: © Reuters.

INDIA - Life Insurance Corporation (NS: LIFI ) of India (LIC) is set to pare down its shareholding in IDBI Bank (NS: IDBI ), yet will maintain a significant stake to continue benefiting from bancassurance advantages and to preserve its strategic alliance with the bank. LIC's Chairman Siddhartha Mohanty confirmed that even after the forthcoming sale of a substantial portion of shares along with the government, LIC will retain a holding that guarantees the ongoing cooperation with IDBI Bank.

The insurance giant's relationship with IDBI Bank transitioned from a subsidiary to an associate company after LIC's stake decreased to 49.24%. This change occurred in January 2019, reflecting a shift in the dynamics of their partnership. Despite the planned reduction in ownership, LIC's investment will still ensure that the two entities maintain a close relationship, with LIC leveraging the partnership for its bancassurance model, which is a key channel for selling insurance products through the bank's network.

The strategic decision to sell a part of the stake comes amidst LIC's broader portfolio management efforts but keeps intact the essence of the partnership that has been nurtured over the years. Chairman Mohanty's statements underline the importance of the ongoing relationship between LIC and IDBI Bank, suggesting that while the structure of ownership may change, the collaborative approach to business will persist.

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