Insurance behemoth LIC is looking to enter the banking space by acquiring majority stake in IDBI Bank as the deal is expected to provide business synergies despite the lenders stressed balance sheet, sources said.
As the government makes efforts to revive the fortunes of IDBI Bank, which is saddled with huge amounts of bad loans, LIC becoming a major stakeholder in the lender could be beneficial for both state-owned financial players in the long run, they added.
While a final decision is yet to emerge on whether LIC would be snapping up over 50 per cent stake in IDBI Bank, official sources said the preliminary contours of such a plan is being worked out.
A possible scenario would be the insurance major making IDBI Bank as a subsidiary on the line of its housing finance and mutual fund businesses. According to the sources, there would be business synergies in case the LIC-IDBI Bank deal materialises.