LIC to acquire up to 9.99% stakes in ICICI Bank; RBI approves proposal
New Delhi, Sept 7: Life Insurance Corporation of India (LIC) will be acquiring up to 9.99 per cent of the paid-up share capital or voting rights in ICICI Bank.
A proposal in this regard has been approved by the Reserve Bank of India (RBI), providing the state-owned insurer with regulatory clearance to increase its exposure to the private sector lender.
ICICI Bank has disclosed the RBI approval in a regulatory filing. The acquisition is subject to compliance with applicable regulatory and statutory requirements.
The move comes as large institutional investors continue to deepen their exposure to India’s financial services sector, with regulatory approvals determining the extent to which individual investors can build significant holdings in banks.
The RBI approval gives LIC greater flexibility to increase its investment in ICICI Bank. However, the clearance itself does not mean that the insurer will immediately take its holding to the 9.99 per cent limit.
LIC is among India’s largest institutional investors and has significant investments across the financial services sector. A higher stake in ICICI Bank would further increase its exposure to one of the country’s largest private sector lenders.
The approval is subject to banking, securities market, foreign exchange and other applicable regulations. LIC will therefore have to comply with the conditions attached to the RBI’s clearance while executing any additional acquisition.
The central bank has stipulated that the approved acquisition must be completed within one year from the date of its approval. If LIC does not complete the acquisition within the specified period, the approval will stand cancelled, according to the regulatory disclosure.
The RBI has also prescribed that LIC’s aggregate holding in ICICI Bank must remain within the approved 9.99 per cent ceiling.
The development gives LIC additional room to deploy capital into the banking sector while maintaining regulatory safeguards around significant shareholding in private lenders.
For ICICI Bank, the approval could strengthen institutional ownership of the lender, although the extent of any eventual increase in LIC’s holding will depend on the insurer’s investment decisions and prevailing market conditions. (BVI)
