The bank will now seek government approval for the deal.
In a BSE filing, IDBI Bank said, “The bank has received a letter dated July 16, 2018 from Life Insurance Corporation of India expressing their interest in acquiring a 51 per cent controlling stake in IDBI Bank, as a promoter through preferential allotment of shares/open offer.”
The bank's board at its meeting held on Tuesday considered the letter and decided to seek approval from the Government of India in this regard.
The board of state-run LIC on Monday approved the acquisition of up to 51 per cent stake in the government-owned lender, Economic Affairs Secretary SC Garg said.
One major challenge for the insurance company while investing in the bank would be its humungous non-performing assets (NPAs).
IDBI Banks gross non-performing assets (NPAs), or bad loans, amounted to a staggering Rs 55,600 crore at the end of the fourth quarter ended March, and the lender posted a loss of Rs 5,662.76 crore for the quarter, thanks mainly to further deterioration in NPA level.
The bank had reported a net loss of Rs 3,199.77 crore for the corresponding quarter of financial year 2017-18. It has now reported losses for the sixth successive quarter.