LIC Assures High Court It Will Pause IDBI Bank Deal Till Aug. 30
The Life Insurance Corporation of India told the Delhi High Court that it will not take any steps till Aug. 30 towards its proposed acquisition of 51 percent stake in IDBI Bank Ltd.
The oral assurance by LIC was given before Justice Vibhu Bakhru as he appeared inclined to pass orders that’d restrain the state-run insurance company from making any investment in the lender where the government intends to dilute its shareholding below 51 percent.
“You (LIC) will not present us with a fait accompli,” the court said after which Additional Solicitor General Maninder Acharya, appearing for the Centre and the LIC, urged that no order be passed and the matter be listed for hearing on Aug. 30 as till then nothing will happen. The ASG also sought time to file an affidavit indicating the reasons behind the government and LIC’s decision. The court gave LIC time till Aug. 30 to file the affidavit in which the insurer was asked to also indicate its board’s minutes of meeting and agenda papers pertaining to the proposed investment.
The order came on a plea moved by the All India IDBI Officers Association which has challenged the LIC’s move. In their plea, moved through advocates Prashant Bhushan and Pranav Sachdeva, the association has said that the change in shareholding could take away the public sector bank status of the IDBI, which in turn could affect their employment conditions.
The petition also claimed that the change in shareholding was not in public interest as it “exposes the investments made by the public in the IDBI and corrodes the ability of the LIC to pay back its policyholders since it will have to invest an amount of Rs 13,000 crore”. It added the acquisition was not financially prudent for LIC as IDBI had bad loans of over Rs 55,000 crore.