Insurance regulator IRDAI on Friday permitted LIC to pick up to 51 per cent stake in the debt ridden IDBI Bank, sources said.

According to sources, the board of Insurance Regulatory and Development Authority of India (IRDAI) at its meeting held today in Hyderabad permitted Life Insurance Corporation (LIC) to increase the current stake from 10.82 per cent to 51 per cent in IDBI Bank.

Sources added that if deal goes through, the IDBI Bank will get capital support of Rs 10,000-Rs 13,000 crore.

State-owned LIC has been looking to enter the banking space by acquiring majority stake in IDBI Bank as the deal is expected to provide business synergies despite the lender's stressed balance sheet.

For LIC it will get about 2,000 branches through which it can sell its products while the bank would get massive funds of LIC. The bank would also get accounts of about 22 crore policy holders and subsequent flow of fund into their account.

"You will get to know whatever is the decision. You will get to know after the minutes of the Board meeting are approved. We will be posting it on our website," Irdai Chairman Subhash Chandra Khuntia told reporters after the Board meeting in Hyderabad.

However, according to sources the regulator has permitted the LIC to pick up to 51 per cent stake in IDBI Bank, thereby relaxing existing rules for investment.

As per norms, an insurance company cannot hold more than 15 per cent stake in a company.

IDBI Bank is grappling with mounting toxic loans with gross non-performing assets rising to a staggering Rs 55,600 crore at the end of latest March quarter. During the three months, the lender's net loss stood at Rs 5,663 crore.
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