Zeebiz Exclusive | Impact of LIC DRHP on IDBI Bank; IDBI Bank may have to shut their home loan business
LIC DRHP: As Indias largest life insurer Life Insurance Corporation of India (LIC) is set to launch its much-awaited Initial Public Offering (IPO) and has filed the Draft Red Herring Prospectus (DRHP) with the market regulator, this is what it has said in its draft papers about IDBI Bank. Zee Business Anurag Shah explains LIC DRHP statement in a conversation with Zee Business Managing Editor Anil Singhvi.
LIC DRHP: As India's largest life insurer Life Insurance Corporation of India (LIC) is set to launch its much-awaited Initial Public Offering (IPO) and has filed the Draft Red Herring Prospectus (DRHP) with the market regulator, this is what it has said in its draft papers about IDBI Bank. Zee Business’ Anurag Shah explains LIC DRHP statement in a conversation with Zee Business’ Managing Editor Anil Singhvi.
Shah said that either IDBI Banks or LIC will have to close its housing finance business by November 2023 as per the rules prescribed by the Reserve Bank of India (RBI). According to the rules, two companies of the same group cannot be involved in same business. In November 2018, LIC had taken over IDBI Bank after the banking approval gave its approval to the takeover. It had given five years time to it to close one of the housing loan portfolios. The deadline ends in November 2023.
IDBI Bank became a subsidiary of LIC with effect from January 21, 2019.
LIC Housing Finance is in the home loan business and it is unlikely that it will close this business. So, IDBI Bank’s housing finance business will come under the heat, he said.
A look at the IDBI Bank’s loan book suggest that 28 per cent of the loan is accounted by home loans. And if we talk about the retail book, 75 per cent of the retail loan book is occupied by the retail home loan, Shah said.
IDBI Bank is also one of the candidates of government's divestment programme. LIC owns a 49 per cent stake in IDBI Bank, while Government owns 46 per cent in IDBI Bank.
Meanwhile, LIC has said that it does not completely want to do away its share in the IDBI Bank. This is because its peers like HDFC Life, ICICI Pru and SBI Life etc have a backing of the banks.
The above information has been mentioned by LIC in its filing to the Securities and Exchange Board of India (SEBI).
Zee Business’ team tried to talk to the management of LIC and IDBI bank, and they said that November 2023 is yet to come. And a lot can happen within that time frame.
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