LIC had sought the approval as per the regulatory requirement – The RBI norms mandate that every person or an entity who intends to make an acquisition in Private Banks of more than 5% stake, prior approval is needed from the Central Bank.
Key points to note –
- LIC currently owns 4.96% in Kotak Mahindra Bank (KMB).
- Approval has been given by RBI to increase the same to 9.99%.
- Approval is valid for one year.
Whether LIC will actually increase it’s stake in KMB is anybody’s guess.
Even if it decides to increase – timelines, extent of increase and the mechanism (primary or secondary) is anybody’s guess at this stage.