Government, LIC To Infuse More Than Rs 9,000 Crore In IDBI Bank

The central government and Life Insurance Corporation of India will together infuse more than Rs 9,000 crore in IDBI Bank Ltd., months after the nation’s largest insurer bought a majority stake in the lender.

Based on their respective shareholding in IDBI Bank, LIC will pump in Rs 4,743 crore and the government will infuse Rs 4,557 crore “on a one-time basis”, Prakash Javadekar, Minister of Environment and Information and Broadcasting, told reporters after the cabinet meeting. This recapitalisation in IDBI Bank will put the lender on the “front foot” to take banking activities to the next level, he said.

“Both LIC and central government will contribute to the capital adequacy, so that the lender can work efficiently,” said Javadekar. Net bad loans of IDBI Bank, according to him, has reduced and its provision coverage ratio has increased.

IDBI Bank’s provision coverage ratio improved to 87.79 percent as of June from 64.45 percent a year ago, according to its analyst presentation. Its net non-performing assets ratio declined to 8.02 percent as of June from 18.76 percent in the year-ago period.

In January, LIC acquired a 51 percent stake in IDBI Bank. While the central government holds 46.46 percent stake, the rest is with financial institutions and the public.

Javadekar said the acquisition of IDBI Bank by LIC has helped the lender to access 11 lakh agents of the insurer, its 3,184 offices and 29 crore policyholders.

Also, the government is monitoring the developments in banking sectors, he said. It has provided Rs 70,000 crore in the Union budget to recapitalise lenders.

Ethanol Price

The Cabinet Committee on Economic Affairs approved a mechanism to revise price of ethanol procured by state-run oil marketing companies, effective Dec. 1.

The higher price of ethanol, derived from different raw materials, has been fixed under the Ethanol Blended Petrol Programme. Under the scheme, oil marketing companies sell petrol blended with ethanol up to 10 percent.

• Prices of ethanol from C-heavy molasses to be increased to Rs 43.75 a litre from Rs 43.46 per litre.
• Prices of ethanol from B-heavy molasses to be raised to Rs 54.27 per litre from Rs.52.43 per litre.
• Price of ethanol from sugarcane juice/sugar/sugar syrup to be fixed at Rs 59.48 per litre.

The move aims at offering improved price to ethanol suppliers, which in turn will help to lower arrears of cane farmers, according to a government statement.