Life Insurance Corporation of India (LIC) has agreed to increase its stake in state owned lender Indian Overseas Bank (IOB) to 14.50% from 10.21%.
LIC will purchase about 86.2 million equity shares of the bank on a preferential basis for INR2bn ($29.7m).
The move would dilute the government of India’s stake in the bank to 77.32% from 81.19% and public shareholders’ stake to 8.18% from 8.60%.
IOB, whose gross NPAs rose to 12.64% in the third quarter ended 31 December 2015, is required to raise capital in order to meet Basel III norms.
"The capital raised would be utilised to shore up the capital adequacy of the Bank and to fund the general business needs of the Bank," IOB said in a BSE filing.