The Reserve Bank of India (RBI) has granted approval to state-owned insurance behemoth, Life Insurance Corporation of India (LIC), to raise its stake in private lender Kotak Mahindra Bank up to 9.99 per cent. Currently, the life insurer holds 4.96 per cent in the private lender.
In a notification to the exchanges, the lender said, “…Kotak Mahindra Bank Limited has received an intimation from LIC stating that the RBI had granted its approval to LIC, for increasing its holding in the Bank up to 9.99 per cent of the paid up equity share capital of Bank...”.
Shares of Kotak Mahindra Bank closed with gains of 2.92 per cent on the BSE post the announcement, the most among Sensex components.
The approval of the central bank will be valid for one year. As per RBI norms, prior approval of the RBI is required to increase stake in private banks beyond 5 per cent.
LIC is one of the biggest institutional investors in India’s stock market and has a stake in a number of private and public sector banks. LIC has a stake in as many 24 scheduled commercial banks, data from Capitaline shows.
Once LIC raises its shareholding in Kotak Mahindra Bank to 9.99 per cent, it will be the second largest shareholding of the insurer in a scheduled commercial bank. Among other major banks, LIC holds 8.8 per cent in Canara Bank, 8.3 per cent in Punjab National Bank and State Bank of India, 8.2 per cent in Axis Bank, and 7.6 per cent in ICICI Bank.
Source : Business Standard
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