On Saturday, IDBI Bank said that its Board of Directors has approved the proposal to sell a portion of its 48 percent stake in IDBI Federal Life Insurance Company Limited (IFLI) to existing joint venture partners-Belgian multinational insurance company Ageas Insurance and Federal Bank.
Ageas will receive 23 percent stake, raising its overall stake in IFLI to 49 percent, while Federal Bank's stake will increase by 4 percent to 30 percent. IDBI Bank's stake in the insurance company will be reduced to 21 percent after the deal is completed.
The sale is subject to all regulatory approvals to be taken by all related parties and agreements which are yet to be finalised, the IDBI Bank said in a regulatory filing.
The reason for the stake sale has to do with LIC's ownership in IDBI Bank.
In January 2019, Life Insurance Corporation India had acquired a 51 percent controlling stake in IDBI Bank. This gives LIC indirect ownership and control over IFLI. As per insurance regulations, an insurer cannot own more than 10 percent stake in another insurer, causing the need for IDBI Bank to lower its stake in the joint venture.