LIC is acquiring R125Cr in Dena Bank for a 5% stake. This investment is a part of LIC's strategy of to acquire stakes in small to medium-sized banks in a bid to support the government, which is finding it difficult to infuse capital into the banks due to its precarious fiscal condition.

LIC currently owns 6% stake in the bank.

The preferential issue to LIC will result in the government's stake in the bank falling below 58% - the threshold limit the government desires to maintain in public sector banks. Dena bank has also requested the government to recapitalise the bank with R500Cr for supporting it's expansion plans over the next three years.

The bank has reported a 20% rise in net profit to R186.6Cr in quarter ended December 2011. The rise was largely due to a 16% jump in net interest income to R541Cr. Gross credit of the bank was up by 15.70% to R47,928.38Cr.

The incremental credit growth during the quarter was over R4,000Cr led by lending to companies.

The total restructured assets of the bank during the quarter was R341Cr, taking its total restructured book to R1,737Cr. The bank restructured its advances to Uttar Haryana which was about R127Cr. The total restructured book of the bank is about R1,737Cr. The gross NPAs of the bank was about R885.32Cr at the end of the third quarter ended-December 31, 2011 increasing marginally by about R54.83Cr. The upgradation during the quarter was Rs 31 crore and cash recovery was R40Cr.

LIC's Holding In Banks

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