IDBI Bank gains 6 per cent after IRDAI approval

IDBI Bank's shares moved up 6 per cent after the Insurance Regulator Development Authority of India ( IRDAI) waved the green flag for the proposal allowing Life Insurance Corporation of India to buy upto 51 percent in the bank on Monday. 

According to the usual regulatory norms on investment, insurance companies are not allowed to hold more than a 15 per cent stake in any company, but as a special case, an exemption has been given to LIC and IDBI bank's proposal on a temporary basis. Eventually, LIC will slowly have to bring back the stake to the normal 15 per cent, but it could take 7 to 10 years. LIC for this period is asked to present a detailed structure including the subsidiary model, capital infusion and also the timeline on when they can bring the stake down. 

Currently, LIC holds 10.8 per cent stake in IDBI Bank. The bank is under RBI's prompt corrective action (PCA) plan. At the end of March 2018, the bank's gross NPAs increased to 27.95 per cent of its loans. 

With this positive development, the stock of IDBI Bank hit an intraday high of Rs. 58 per share and an intraday low of Rs. 55 on the BSE, on Monday. The stock's 52-week high is recorded at Rs. 89.80 per share and its 52-week low at Rs. 49.15 per share on the BSE. 

At 11:43 IST, the stock was trading at Rs. 56.05 per share up by 2.09 per cent on the BSE. The BSE Sensex was trading at 35,170.71 level, down by 0.72 per cent while NSE Nifty50 was traded at 10,625.70 level, down by 0.83 per cent.