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Private bank IndusInd Bank on Friday said the RBI has given approval to LIC to up stake in the bank to nearly 10 per cent.

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The RBI norms mandate that every person or an entity who intends to make an acquisition in private banks of more than 5% stake, has to take prior approval from the central bank. LIC’s raising of stake is subject to compliance with the provisions of the directions given by RBI in 2015 and required regulations by the market regulator SEBI.

The bank has received an intimation from the RBI on December 9, 2021, that it has granted its approval to Life Insurance Corporation (LIC), a shareholder of the bank to acquire up to 9.99 per cent of the total issued and paid-up capital of the bank, the bank said in a regulatory filing on stock exchanges. The said approval is valid for a period of one year i.e., up to December 8, 2022.

The largest state-run insurer already holds 4.95 per cent of the total issued and paid-up capital of Indusland bank.

The RBI approval is subject to compliance with the direction on ‘Prior Approval for Acquisition of Shares and Voting Private Sector Banks’ as well as regulations of the Sebi and any guidelines or regulations.

The Reserve Bank last month had accepted most of the recommendations of its working group on corporate ownership of private sector banks, by allowing unrestrained promoter shareholding in the first five years of operations. It recommended hiking the same to 26 per cent after 15 years from the extant 15 per cent and also the new capital requirements. Hindujas, who run IndusInd Bank, have shown their interest in doing so.

Last month, Kotak Mahindra Bank had informed that LIC has received approval from the RBI to raise its stake in the lender to up to 9.99%. This was deemed beneficial for banks like Kotak Mahindra Bank and IndusInd Bank.

IndusInd Bank shares were marginally up at Rs 947 on BSE in afternoon trade.

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