Mumbai: IDBI Bank on Friday said its board will meet on 4 October to consider preferential allotment of upto 51% shares to Life Insurance Corp. of India (LIC). LIC already holds a 7.98% stake in the bank.

IDBI shares on the BSE closed at 50 on Monday, up 0.4% from its previous close.

In a statement to the stock exchanges, IDBI Bank said it has received a letter dated 27 September from LIC conveying approval of its board of directors for subscribing to the equity capital of IDBI Bank, through a preferential issue or open offer, to pick up a controlling stake as the promoter.

“IDBI Bank’s board will meet on 4 October to consider the preferential allotment of equity shares to LIC aggregating up to 51% of post-issue paid up capital of the bank and for conducting postal ballot for obtaining shareholder’s approval for preferential issue of capital to LIC, under section 62(1)(c) of the Companies Act, 2013 and other consequential matters," said IDBI Bank.

On 17 July, the bank’s board had approved a proposal seeking the government’s nod to classify LIC as a promoter once the life insurer acquires a majority stake in IDBI.

The the state-owned lender had then said that it received communication from LIC expressing interest in acquiring a 51% stake through preferential allotment of shares or an open offer. “So, largely the three things to look into are expression of interest by LIC taking a 51% controlling stake, to give them promoter status and to decide upon the mode of infusion, whether by way of preferential shares or through an open offer," B. Sriram, managing director and chief executive officer, IDBI Bank, had said. “LIC will get management control post the deal."

On 29 June, the Insurance Regulatory and Development Authority of India had provided LIC a regulatory exemption to pick up more than 15% stake in the bank. However, it has to pare its stake to 15% over five to seven years.

IDBI Bank’s losses widened to 8,237.92 crore in 2017-18, from 5,158 crore in the previous fiscal. Gross bad loans almost doubled to 55,588.26 crore in 2017-18, or 32.36% of the bank’s gross advances for the fiscal.