“The LIC-IDBI Bank deal will trigger an open offer to protect the interest of minority shareholders in the bank,” PTI reported citing unidentified sources. The stake purchase move is expected to help the debt-struck public sector bank to get a capital support of Rs 100-130 billion. An acquirer has to be place an open offer to the target company’s shareholders on acquiring shares or voting rights of 25 per cent or more, according to the Sebi takeover code.

The insurance sector watchdog in its last meeting held in Hyderabad last month, had permitted the insurance company to hike its stake from 10.82 percent to 51 percent in IDBI Bank. Any insurance company can’t hold more than 15 percent in any listed financial firms.

LIC has been looking to enter the banking space by acquiring a majority stake in IDBI Bank as the deal is expected to provide business synergies despite the lender’s stressed balance sheet.

The insurance behemoth get about 2,000 branches through which it can sell its products, while the bank would get massive funds of LIC. The IDBI Bank would also get accounts of about 22 crore policy holders and subsequent flow of fund.

If the deal goes through, state-owned bank which is grappling with rising toxic loans with gross non-performing assets rising to a staggering Rs 556 bn at the end of the March quarter, will get much needed capital support to revive its fortune.