Shares of IDBI Bank rose as much as 9.9 percent to an over two-week high of Rs 58.6 on Wednesday.

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The debt-laden firm’s shares are on track to post gains for the fourth straight session after reports that the Life Insurance Corporation of India’s (LIC) planned investment of a majority stake in the state-run bank may trigger an open offer and preferential allotment of shares.

At 10.22am, shares of IDBI Bank were trading at Rs 56.60, rising 6.39 percent. The stock has fallen nearly 11 percent this year as of last close.

CNBC-TV 18 reported on Tuesday that the nod for LIC-IDBI deal is not without conditions and the public sector life insurance behemoth will eventually bring down its stake within permissible limits in a time-bound manner.

Speaking to CNBC-TV 18, Nilesh Sathe, member of the Insurance Regulatory Development Authority of India (IRDA), said that the regulator has approved the much talked about LIC-IDBI Bank deal and that LIC’s investment of up to 51 percent will have to be subjected to a time bound exit.

Sathe said the LIC-IDBI deal is expected to benefit policy holders while also helping the debt-laden bank to restructure its assets. LIC will also get to leverage the over 2,000 bank branches for selling its products and expand bancassurance network.

He rubbished reports suggesting LIC’s intention of owning IDBI Bank, and categorically stated that the company hasn’t expressed the intention of owning a bank and the deal between the insurance giant and IDBI Bank is not a part of government’s divestment plan. On the other hand, acquiring stake in IDBI at their lowest levels makes the deal very attractive, he added.

Critics, however, have questioned the LIC's move to invest in the IDBI Bank, which reported a net loss of Rs 5,662.76 crore during the January-March quarter this year, largely on the back of non-performing assets (NPA) provisions, with the bank reporting its highest ever gross NPA ratio at 27.95%.

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First Published:Jul 11, 2018 10:56 AM IST