The IDBI Bank’s proposal for changing its name has not found any favour from the Reserve Bank of India, sources said. The board of IDBI Bank last month proposed a change in the name of the lender to either LIC IDBI Bank or LIC Bank, after its takeover by Life Insurance Corporation. According to the sources, the RBI is not in favour of changing the name of IDBI Bank.
The board had made LIC IDBI Bank Ltd as the first preference followed by LIC Bank Ltd. Besides the RBI, change of name requires clearance from the Ministry of Corporate Affairs, shareholders, stock exchanges, among others.
In January, the insurance behemoth LIC finished the acquisition of 51 per cent controlling stake in IDBI Bank, marking the entry of more than 60 years old state-owned insurer into the banking space.
The RBI, on March 14, categorised IDBI Bank as a private sector bank for regulatory purposes, with effect from January 21.
In the wake of Life Insurance Corporation of India (LIC) acquiring 51 per cent of the total paid-up equity share capital of the bank.
While LIC acquiring a stake has been in the news for quite sometime, the labelling of IDBI as a private bank came as a surprise to the lender’s 17,500 employees. The average age of the staff is 30 years, and many have 20 to 30 years of service left.
In August last year, the Cabinet allowed the acquisition of controlling stake by Life Insurance Corporation (LIC) as a promoter in the bank through a combination of preferential allotment and open offer of equity.
LIC had been looking to enter the banking space by acquiring a majority stake in IDBI Bank, as the deal is expected to provide business synergies despite the lender’s stressed balance sheet.
For the third quarter ended December 2018, IDBI Bank posted widening of loss by nearly threefold to Rs 4,185.48 crore as bad loans surged.
The bank had reported a net loss of Rs 1,524.31 crore in the corresponding quarter of the previous fiscal. Total income decreased to Rs 6,190.94 crore for the quarter, compared to Rs 7,125.20 crore in the corresponding quarter a year ago.
