Bank admixture at par! IDBI Bank to get Rs 9,000 crore relief from govt, LIC soon

New Delhi, September 04: Clearing the recapitalization of IDBI Bank with a one-time infusion of funds by both the government and the LIC, the Cabinet on Tuesday approved 9,000 crore capital infusion into IDBI Bank, including 4,557 crores as one-time re-capitalisation.

 

Briefing media after the Cabinet meeting in New Delhi, Prakash Javadekar said this will help both IDBI and LIC, and it shows the government's commitment to take banking to a sound level."The government is watching developments in the banking sector and is committed to the recapitalisation of banks", he added.

 

 

The government had been trying to privatize IDBI Bank for the past few years amid mounting losses and rising bad loans. The government’s intention to privatise IDBI Bank was first stated by former finance minister late Arun Jaitley in his budget speech in 2016.

 

Following the Cabinet’s approval in August 2018, LIC acquired majority 51% stake in IDBI Bank. LIC completed the acquisition earlier this year in January by infusing over ₹21,000 crore into the bank.

 

This infusion will however be through recapitalisation bonds, in which the government will infuse capital into IDBI, which will in turn buy the recap bonds from the government the same day. “This will have no impact on liquidity or the current year’s budget," the Centre cleared.