MUMBAI: Paving the way for the sale of IDBI Bank, Sebi has approved the reclassification of Life Insurance Corporation as a public shareholder from promoter of the bank once the sale transaction is concluded. The regulator’s nod is subject to conditions, including LIC’s voting rights being capped at 10%, no board representation or control over the bank’s affairs, and reducing its stake to 15% or below within two years of the deal closure, as directed by RBI. The Department of Investment and Public Asset Management (Dipam) had conveyed Sebi’s decision to LIC after the Cabinet’s 2021 approval for strategic disinvestment in IDBI Bank.Recently, speculations that IDBI bank will be acquired by Emirates NBD were sparked when the Middle Eastern lender got a licence from RBI to operate a wholly owned subsidiary in India. LIC chairman R Doraiswamy, in a recent interview to TOI said, “We acquired up to 51% of IDBI Bank because their recapitalisation need provided us an opportunity. We are now at 49.2%. The govt and LIC will jointly offload part of our stake during privatisation, but we will retain a significant holding post-sale and continue the relationship.”LIC became the owner of IDBI Bank in Jan 2019 when it acquired a 51% controlling stake for about Rs 21,624 crore to rescue the lender from mounting bad loans and weak capital buffers. With the insurance giant’s infusion and takeover of management control, IDBI Bank was reclassified by RBI as a private sector lender. The deal provided IDBI Bank with capital for revival while giving LIC, which already held about 10.8% before the transaction, access to the bank’s branch network for insurance distribution. Despite continued challenges around asset quality, the deal marked one of the biggest state-backed interventions to stabilise a struggling lender.