A quarter of its loan book gone bad, a net loss of over Rs 5,600 crore in just the Q4, a halt in corporate lending and a shrinkage in international operations.

IDBI Bank clearly finds itself in choppy waters and the government finds itself desperately looking for a solution.

Reports coming in today indicate that the government is considering selling a significant stake in IDBI Bank to Life Insurance Corporation (LIC).

But sources tell CNBC-TV18 that while discussions are on, no proposal has been taken to the LIC board yet. A proposal once finalised will first have to be cleared by LIC's investment & strategy committee and the quantum of stake to be bought will depend on negotiations & decision by the committee.

Speaking to CNBC-TV18, BP Sharma, former executive director at Bank of India, said that news is speculative and definitely government is keen to reduce stake in IDBI Bank, which is not coming strictly a public sector bank.

Sharma said privatisation of the bank is not feasible in the near future and that is why government is trying to reduce stake and there is nothing wrong in that.

AK Bhattacharya, Editorial Director at Business Standard, blames government for not privatising IDBI Bank.

Government is trying to shore up its disinvestment revenues through this and around Rs 10,000-11,000 crore is likely to be garnered through this sale, Sharma said to CNBC-TV18.

Bhattacharya said, "LIC need to be very sure that their investment needs to safe, sound and prudent. I see this attempt as using regulatory forbearance to get the country’s largest insurer to have a stake in the bank."

He further added, “I hope Insurance Regulatory and Development Authority (IRDA) takes necessary note of this and it's not a good sign."