Insurance behemoth Life Insurance Corporation of India will raise its stake in private sector lender Kotak Mahindra Bank to nearly 10 per cent, after receiving a grant of approval from the Reserve Bank of India (RBI). This is also subject to SEBI regulations, Foreign Exchange Management Act among others.
Life Insurance Corporation of India (LIC) is an Indian statutory insurance and investment corporation under the ownership of the Ministry of Finance, Government of India.
Kotak Mahindra Bank Limited, the third-largest private sector bank in India, offers banking products and financial services for corporate and retail customers in the areas of personal finance, investment banking, life insurance, and wealth management.
The RBI norms mandate that for every person or an entity who intends to make an acquisition in Private Banks of more than 5% stake, prior approval is needed from the Central Bank.
Currently, LIC holds 4.96% in Kotak Bank, as per the information available from the shareholding pattern till 30 September.
Kotak Mahindra Bank (Kotak) said it has received an intimation from LIC regarding the same. The approval is valid for a period of one year, Kotak said.
“Kotak Mahindra Bank has received an intimation from Life Insurance Corporation of India (LIC) stating that the Reserve Bank of India had granted its approval to LIC, for increasing its holding in the bank up to 9.99 per cent of the paid-up equity share capital of the bank,” Kotak said in a regulatory filing on Monday.
In recent times, LIC has acquired an interest in other companies as well. In September, LIC increased its stake in the Bank of India by over 3.17 per cent to hold a total stake of 7.05 per cent. Earlier this month, Life Insurance Corporation also bought 79,000 equity shares or 0.02% stake of Aurobindo Pharma.
The Union government is planning the initial public offering (IPO) of Life Insurance Corp. of India (LIC) Ltd in the March quarter next year. This will be one of the biggest IPOs in India. The government is looking to offload about a 10 per cent stake in LIC through the IPO with a disinvestment target of ₹1.75 trillion in FY22.
After the news, Kotak Bank shares traded at Rs 2,020 on BSE, up 2.91 per cent from the previous close.
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