IDBI Federal Life deal expected be closed by September, says IDBI Bank CEO Rakesh Sharma

The IDBI Federal Life deal is expected to be closed by September while the approval from Insurance Regulatory and Development Authority (IRDA) will be taken only after the deal is finalized, said IDBI Bank CEO, Rakesh Sharma.

The CEO’s statement comes as the deal gained widespread attention following the interest shown by several parties such as Bharti Axa Life Insurance, Kotak Life Insurance, Rakesh Jhunjhunwala’s RARE Enterprises and Kedaara Capital to gain controlling stake last year.

"We expect the IDBI Federal Life Insurance deal to be closed by September this year.  We will seek IRDA nod only after the deal is finalized," Sharma said during the bank's earnings concall.

In April, IDBI Bank' board had approved to sell 23-27 percent stake in its insurance arm IDBI Federal Life Insurance

About 48 percent of IDBI Federal Life Insurance is owned by IDBI Bank, 26 percent is owned by Federal Bank and balance 26 percent is owned by Belgian insurance company, Aegis Insurance. So, all three parts are up on the block and non-binding bids for them have been selected.

The bank on Saturday posted a net profit of Rs 135 crore for the quarter ended March 2020 on account of recoveries from bad loans. The lender reported a profit after 13 straight quarters of net losses.

Speaking further, Sharma said that the bank had offered moratorium to all the borrowers with some of them opting out.  As per Sharma, 68 percent of retail borrowers, 69 percent of corporate borrowers and 51 percent of the mid-corporate segment have availed the benefit. Further, the bank also provided ten percent on the SMA accounts under moratorium.

"Almost 70 percent of our borrowers are from the salaried class. We are quite optimistic that our asset quality position will not be adversely affected due to moratorium," Sharma stated.