State-owned IDBI Bank said Friday its board will meet next week to consider preferential allotment of up to 51 per cent shares to insurance behemoth LIC to acquire the debt ridden bank.

In a regulatory filing, IDBI Bank said it has received a letter from LIC conveying approval of their Board of Directors for subscribing to the equity capital of the bank, through preferential issue /open offer, up to 51 per cent, as an acquisition of controlling stake as promoter in the bank.

IDBI Bank further said its board will meet on October 4 to “consider the preferential allotment of equity shares to LIC aggregating up to 51 per cent…”

Earlier this month, the LIC board had taken decision on the modalities and timeline for increasing stake in IDBI Bank to 51 per cent.

The bank, in which the government holds 85.96 per cent stake, had posted a net loss of Rs 2,409.89 crore in the quarter ended June 2018. It had posted a gross non-performing asset (NPA) of about Rs 57,807 crore.

The Insurance Regulatory and Development Authority of India in June had permitted LIC to increase its stake from 10.82 per cent to 51 per cent in the IDBI Bank. As per current regulations, an insurance company cannot own more than 15 per cent in any listed financial firm.

LIC has been looking to enter the banking space by acquiring a majority stake in IDBI Bank as the deal is expected to provide business synergies despite the lender’s stressed balance sheet.