NEW DELHI: The board of LIC, India's largest life insurer, on Monday approved the proposal to acquire a majority stake in IDBI BankNSE 1.15 %, ET Now reported.

LIC, which held 7.98 per cent stake in the bank as of June 30, would buy out 43 per cent more.

According to Sebi takeover code, an acquirer has to come out with an open offer to shareholders of the target company on acquisition of shares or voting rights of 25 per cent or more. But the deal in question may not trigger an open offer.

Open offer for IDBI Bank's shares may not be required as public holding in the bank is very low," Economic Affairs Secretary Subhash Chandra Garg told ETNow. "If required, LIC may come out with an open offer, but not material in this context," Garg said.

Most likely, LIC will increase stake in the bank via the preferential share route. The state-owned insurer will now approach market regulator Sebi for its nod to acquire the proposed stake in the debt-ridden bank.

Insurance regulator Irdai has already given its approval to LIC to raise its stake to 51 per cent in IDBI Bank.

The move is seen helping the cash-strapped PSU bank get a capital support of Rs 10,000-13,000 crore, which had run up Rs 55,600 crore bad loans at the end of the March quarter. On the other hand, the deal will help LIC's entry into the banking space. It is expected to provide business synergies despite the lender's stressed balance sheet.