LIC may participate in bank recapitalisation programme

State-owned Life Insurance Corporation may be roped in to participate in the Rs 2.11 lakh crore recapitalisation initiative for public sector banks (PSBs).

As part of the programme, LIC could also increase its stake in various PSBs which are required to raise Rs 58,000 crore from the capital market, sources said.

Besides, they said, LIC could participate in a non operating holding company (NOHC) structure to which the government may transfer its share in various PSBs (rpt) PSBs.

NOHC could then issue recapitalisation bonds worth Rs 1.35 lakh crore.

However, government has said that nature of bonds and who will issue them would be decided in the due course.

Finance Minister Arun Jaitley last week said that there were multiple options before the government for recap bonds and they are being examined and the best ones would be explored.

LIC in the past has pumped capital in PSBs through preference share allotment and Qualified Institutional Placement (QIP).

Earlier this year, Bank of India issued preference share to LIC worth Rs 451 crore. Similarly, UCO Bank, IDBI Bank, United Bank of India, Dena Bank and Indian Overseas Bank also issued preference shares to LIC in the past few years as part of their effort to shore up their capital.

In the recent Rs 15,000 crore QIP placement by the countrys largest lender State Bank of India (SBI), LIC was one of the largest participants. It picked up shares worth over Rs 5,800 crore or 38.6 per cent of the total.

Sources said that if there is LIC participation in the government recapitalisation initiative, it would be as per the regulatory investment ceiling fixed by the Insurance and Regulatory Development Authority of India (Irda).

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)


Dear Reader,


Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.

We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel