“With the approval of LIC’s board, which was of the view that the proposed acquisition is a sound business proposition and is both commercially viable and a good investment opportunity, LIC submitted a proposal informing, inter alia, of various measures for safeguarding the policyholders fund, to the Insurance Regulatory and Development Authority of India (IRDAI) for acquiring controlling stake in IDBI Bank,” Goyal said, in a response to a question in the Rajya Sabha.

Following insurance regulator IRDAI’s permission, LIC wrote to IDBI Bank last month expressing interest in acquiring the stake in the bank. IDBI Bank has sought the government’s approval, which is under consideration, as its stake will come down below 51 per cent following the deal, Goyal said. The government owned 85.96 per cent and LIC 7.98 per cent shares in IDBI Bank at the end of June.

In a response to another question in the Rajya Sabha, Minister of State for Finance Shiv Pratap Shukla said there was no “strong” opposition to the move from LIC’s policyholders, though some employees’ associations from LIC and IDBI Bank expressed concerns. LIC has 220 million policyholders.

“With regard to whether there is a strong opposition from LIC policyholders, government has checked the position in the matter with LIC, which has conveyed that this is not the case as per its records,” Shukla said in a written response.

LIC is expected to pump Rs 100-130 billion into IDBI Bank through a preferential allotment of new equity shares at a price determined by a formula under the Securities and Exchange Board of India’s rules.

The deal will likely trigger an open offer, which LIC will make to IDBI Bank’s shareholders.