New Delhi: Delhi High Court has asked the Life Insurance Corporation of India (LIC) not to proceed with the IDBI Bank deal till August 30. The court has asked the insurer to step back on account of a writ petition filed by the All-India IDBI Bank Officers’ Association raising concerns that the deal would cause hardship to the bank’s employees. Also Read - Union Budget 2020: IDBI Bank to be Privatized Post Government Exit

The writ petition has been filed under Article 226 of the Constitution for disallowing the government from reducing its shareholding in IDBI Bank Ltd below 51 per cent.  Advocates Prashant Bhushan and Pranav Sachdeva of the association said that the change in shareholding could take away the public sector bank status of the IDBI which in turn could affect their employment conditions. Also Read - Union Budget 2020: Govt Proposes to Sell a Part of Its Holding in LIC Through Initial Public Offering

LIC has told Delhi High Court that it will not proceed till August 30 in relation to the proposed acquisition of 51 per cent stake in the Industrial Development Bank of India (IDBI). Also Read - LIC's Pay When You Stay Scheme For Home Buyers: No Principal Repayment Until Possession

In its petition, the Association claimed that “the acquisition will result in the loss of the status of IDBI Bank as a ‘public sector bank’ and a ‘government company’, which is in violation of Parliamentary assurances.”

The notice was issued to LIC and the Centre on Friday seeking their response to the Association’s petition.

LIC has been asked not to proceed until the next hearing. The Court has asked why the regulations were relaxed for the deal.

For acquisition of IDBI, a change was made to allow LIC to raise its stake in IDBI Bank to 51 per cent. The relaxation was made only for the deal considering  insurers are not allowed hold more than 15 per cent stake in any company.

The oral assurance by the LIC was given before Justice Vibhu Bakhru as he appeared inclined to pass orders restraining the state-run insurance company from making any investment in the IDBI in which the government intends to dilute its shareholding below 51 per cent.

“You (LIC) will not present us with a fait accompli,” the court said after which Additional Solicitor General Maninder Acharya, appearing for the Centre and the LIC, urged that no order be passed and the matter be listed for hearing on August 30 as till then nothing will happen.

The ASG also sought time to file an affidavit indicating the reasons behind the government and LIC’s decision.

The petition also claims that the change in shareholding was not in public interest as it “exposes the investments made by the public in the IDBI and corrodes the ability of the LIC to pay back its policyholders since it will have to invest an amount of Rs 13,000 crores to acquire the 51 per cent stake”.

“Further the said acquisition is not a financially prudent decision for the LIC given the fact that IDBI Bank Ltd has gross non-performing assets amounting to a whopping Rs 55,588.26 Cr.

“The said investment will be made from the funds of 38 crore policyholders of the LIC who have invested their hard earned money to secure their own futures. The said investment made by the LIC will adversely hamper its own abilities to pay its insurance holders,” the petition has said.

(With PTI Inputs)