IDBI Bank said its board of directors has approved the issue of shares to Life Insurance Corporation of India to make the latter the majority shareholder in the bank.
The insurer will hold 51% of the total shares of IDBI Bank once the issue is completed, it added.
The Bank had around 418 cr shares outstanding, as of June end.
Out of this, LIC already held 33.4 cr shares. To make LIC the majority shareholder, it would have to raise this to around 388 cr shares.
This means IDBI Bank would have to issue another 355 cr shares to the insurer.
At around Rs 61.7 per share, that would cost LIC around Rs 21,900 cr.
Separately, the bank also said that it has already alloted another 34 cr shares to the LIC at Rs 61.73 each for a price of Rs 2,098 cr.
The money invested by LIC is expected to be used by IDBI Bank to make up for the loans defaulted by major business groups in the country.
The Bank will now seek the approval of its shareholders through postal ballot.
The Postal ballot Notice will be issued to shareholders and the voting period will start on Oct 09 and end on Nov 07, the bank said.