Mumbai: On Tuesday the government said that it would infuse Rs. 4557 crore and LIC, Life Insurance Corporation would put in Rs. 4700 crore for recapitalization of IDBI bank. The news came four days after the Union Finance Minister Nirmala Sitharaman announced the mergers of the ten state-run banks into four larger entities.
“Cabinet has cleared recapitalization of IDBI bank with a one-time infusion of funds by both government and LIC. It will help both IDBI and LIC and shows the government’s commitment to take banking to a sound level,” Union environment minister, Prakash Javadekar said.
The decision came after the news of India’s GDP falling to 5% a low that occurred after six years. A year ago LIC board decided on the modalities of increasing stake in the IDBI bank to 51%.
“The recapitalization will help IDBI to come on the front foot and take banking to the next level, “ Javadekar said.
When the former Prime Minister Manmohan Singh criticized the government over ‘alleged mismanagement’ Javadekar said that from being the 11th largest economy of the country had moved to being the fifth-largest economy. “We are on our way to becoming the third-largest,” he said.
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