New Delhi: The government on Wednesday cleared the Life Insurance Corporation's acquisition of a 51 per cent stake in debt-ridden IDBI Bank. The LIC will raise its stake in the bank from the current 8 per cent to 51 per cent, making it a majority holder.

"The government has infused capital to the tune of Rs 16,000 crore since 2015... For further capital infusion, expansion of the bank's reach and professional management at the bank, the cabinet has approved LIC to take over IDBI Bank," finance minister Piyush Goyal told reporters after the cabinet meeting.

"IDBI will be a 51 per cent subsidiary of the LIC," Goyal said.

The government's stake will come down from the current 80.96 per cent to around 45 per cent. The bank will issue fresh equity shares to be taken up by the LIC.

Finance ministry officials said the cabinet approval was required as the government's stake would be diluted below 51 per cent in the bank.

However, Parliament's approval will not be required as it does not require any change in the LIC Act. As it is going to be a financial deal under the LIC Act, the legislation will not require any amendment, they said.

The LIC will buy the stake in IDBI Bank through a preferential allotment and an open offer, they said. The transaction will give promoter rights to the LIC.

The ministry of corporate affairs and the Competition Commission of India have given an in-principle approval, the official said.

The deal now awaits a go-ahead from the Reserve Bank of India and Sebi.

According to Sebi's takeover code rules, the acquiring company has to make an open offer to the shareholders of the target company to acquire shares or voting rights equal to or more than 25 per cent. Since the LIC will have a controlling stake through the preferential share route, it needs an exemption from the stock exchange regulator.

The LIC may have to bring down its stake in other banks to 10 per cent over a period to avoid any conflict of interest, the official said. The insurer owned more than 10 per cent in at least six banks and it has to be brought down to 10 per cent, according to the RBI guidelines, the official added.

GST laws

The cabinet on Wednesday approved amendments to the GST laws, including a hike in the turnover threshold for businesses under the composition scheme to Rs 1.5 crore.

As many as 46 amendments were cleared by the GST Council chaired by Goyal, at its meeting on July 21.

The amendments will allow employers to claim input tax credit on facilities such as food, transport and insurance provided to employees.

It also provides for modification of reverse charge mechanism, separate registration for companies having different business verticals, cancellation of registration, new return filing norms and issuance of consolidated debit/credit notes covering multiple invoices.

Hind Copper

The cabinet has approved a fresh equity issue of 15 per cent by Hindustan Copper, which will help the state-run company raise Rs 900.6 crore.

Hindustan Copper (HCL) will issue 13.87 crore fresh equity shares, to the extent of 15 per cent, which will bring down the government's stake in the PSU to 66.13 per cent, an official statement said. At present, the government holds a 76.05 per cent stake in the PSU.