How will acquisition of stake in IDBI Bank benefit LIC and stakeholders? Delhi HC

The Delhi High Court yesterday asked Life Insurance Corporation of India (LIC) to explain how its decision to acquire a 51% stake in IDBI Bank would be beneficial to the interest of the company and its stakeholders..The Court, therefore, directed the state-run insurer to place on record the agenda papers and minutes of the meetings of the LIC Board which led to this proposal..The Bench of Justice Vibhu Bakhru was hearing a plea seeking to prevent the government’s move to dilute its stake in IDBI below 51%, and the subsequent acquisition of that stake by LIC..Additional Solicitor General Maninder Kaur Acharya, appearing for the Central government and LIC, assured the Court that LIC would not give effect to its decision by investing in IDBI, till the next date of hearing..Previously, Justice Bakhru had directed LIC to file an affidavit stating why it would not be bound by The Insurance Act, 1938 and its regulations, which do not allow insurance companies to hold more than a 15% stake in another company..With respect to the challenge to the government’s move to dilute its stake in IDBI, Justice Bakhru said,.“Whether a Court can interfere in the government’s disinvestment policy, is a different issue.”.The writ petition is filed by All India IDBI Officers’ Association, fearing that IDBI’s loss of status as a “public sector bank” would adversely affect the employment conditions of its employees, especially the ones belonging to SC/ST and OBC categories..The petitioner association alleges that this acquisition is also not in public interest, since it exposes the investments made by the public in IDBI, and hampers the ability of LIC to pay back its policyholders since it will have to invest an amount of Rs 13,000 crore to acquire a 51% stake..It is also claimed that the said acquisition is not a financially prudent decision for LIC, as IDBI has gross NPAs amounting to Rs. 55,588.26 crore..The petition was filed through Advocate Pranav Sachdeva. Prashant Bhushan appeared for the petitioners..The matter will next be heard on August 30.