However, banking sources said the LIC may have to cut down its stake in other banks as the promoter of a bank cannot hold more than 5 per cent stake in other banks. LIC holds sizeable stake in many PSU banks, including SBI, and nominee directors in some of them.

On Monday, LIC, the largest financial institution in the country, completed the acquisition of 51 per cent stake in IDBI Bank, making it the majority shareholder of the bank. LIC is not a financial investor in IDBI Bank. The board has approved reclassification of LIC as “promoters” of IDBI Bank in terms of the shareholder’s resolution passed on November 7, 2018 to this effect,” the bank said in a stock exchange filing.

The bid by LIC for a banking licence after the RBI released the final licensing guidelines in February 2013. LIC Housing Finance was among 27 entities which applied for licences. IDFC and Bandhan finally got the RBI approval while the claims of LIC Housing and others were not considered by an RBI committee headed by Bimal Jalan. What might have gone against the LIC Housing bid for a licence was the involvement of its top officials in the 2010 housing scam.

In 2002, LIC made its first attempt to take control of a bank. LIC’s bid to acquire Corporation Bank did not work out as the proposal was not approved by the RBI. LIC had to bring down its stake in Corporation Bank from around 27 per cent.

On Monday, LIC appointed Rajesh Kandwal, MD & CEO of LIC (International) as its nominee director on the bank’s board. The bank also asked Rakesh Sharma, K P Nair and GM Yadwadkar to continue as Directors and as MD & CEO and DMDs respectively till the board approves appointment of new MD & CEO and DMDs.