The Cabinet on Wednesday has decided to bring its shareholding below 50 percent by dilution in IDBI Bank and has cleared the LIC-IDBI deal, sources said.

The Ministry of Corporate Affairs and the Competition Commission of India have given an in-principle nod to the deal. However, the formal nod by the companies is yet to be taken, the sources said.

As per the proposal, the debt-laden bank will issue preferential shares to Life Insurance Corporation (LIC) to raise capital. The government has allowed the relinquishment of the management control of the bank.

The LIC-IDBI deal has been approved, a source said after the meeting of Union Cabinet, chaired by Prime Minister Narendra Modi. The government is not looking for any cash benefit in from this deal, the source said.

LIC already has 7-7.5 percent stake in the bank and will acquire the remaining for majority holding.

Although, the proposed acquisition by LIC would not bring any money to the government, the bank would get capital support between Rs 10,000 crore and Rs 13,000 crore, depending on the share price of the bank.

(With inputs from PTI)

First Published:Aug 1, 2018 3:40 PM IST