Startups

IDBI Bank signs agreement to transfer IDBI MF business to LIC Mutual Fund


IDBI Bank signed an agreement on December 29 to transfer schemes from IDBI Mutual Fund (IDBI MF) to LIC Mutual Fund (LIC MF).

“In terms of Regulation 30 of the SEBI (LODR) Regulations, 2015, we hereby advise that on December 29, 2022, a Scheme Transfer Agreement has been signed between IDBI Mutual Fund (IDBI MF) and LIC Mutual Fund (LIC MF) for transfer of Schemes of IDBI MF to LIC MF to comply with Regulation 7B of SEBI Mutual Fund Regulations,” the bank said in an exchange filing.

LIC completed the takeover of IDBI Bank, the sponsor of IDBI Mutual Fund, in January 2019. However, LIC has its own asset management company, LIC Mutual Fund, under the Securities and Exchange Board of India (Sebi) rules.

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A regulation earlier said a single promoter cannot own more than 10% stake in multiple asset management companies. Since IDBI Bank, parent of IDBI MF, is majority owned by LIC, the transfer is necessary.

Mint has earlier reported that some employees of IDBI Asset Management Co. (AMC) were objecting to the merger of the AMC with LIC Mutual Fund.

A separate document prepared by the employees highlighted that IDBI AMC is a profitable concern and is being merged with a loss-making asset management company. “Common sense would suggest that IDBI AMC should have taken over LIC AMC and not the other way round as the parent would remain the same. Also, there is a lot of interest in the asset management business from players who have been keen to set up their AMC business. So for AMC’s such as IDBI AMC, open market sourcing would have given the exchequer higher valuation,” the document said.

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The shares of IDBI Bank were trading higher by a percent at 54.45 on BSE at the time of writing this copy. It hit a 52-week high of 61.05 on December 15, 2022 and a 52-week low of 30.50 on June 30, 2022.

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