IRDAI has given approval to LIC for a major stake purchase that will provide capital support of about Rs 10,000–13,000 crore to which state-owned bank?

Introduction / Context:
This question focuses on a significant development in the Indian banking sector involving the Insurance Regulatory and Development Authority of India (IRDAI), Life Insurance Corporation of India (LIC) and a public sector bank. The event involved LIC acquiring a large stake in a state owned bank, effectively giving it substantial capital support. This was a major news item in banking and financial current affairs and is thus widely asked in exams.

Given Data / Assumptions:

• IRDAI granted approval to LIC for a stake purchase.
• The stake purchase would provide capital support of around Rs 10,000–13,000 crore.
• The bank in question is a state owned bank.
• Options are Union Bank of India, IDBI Bank, United Bank of India and Indian Bank.

Concept / Approach:
The key is to recall that LIC was allowed to increase its stake and effectively take managerial control of IDBI Bank. This was done to help recapitalise the bank, which was facing stress due to high levels of non performing assets. IRDAI had to approve this transaction because LIC is an insurance company and there are regulatory limits on the percentage of equity it can hold in a single entity. Recognising that this high profile recapitalisation involved IDBI Bank gives the answer.

Step-by-Step Solution:
Step 1: Recall news that LIC was allowed to acquire a controlling stake in IDBI Bank with regulatory approvals.Step 2: The transaction involved capital infusion in the range of Rs 10,000–13,000 crore, as mentioned in the question.Step 3: Union Bank of India, United Bank of India and Indian Bank did not involve similar large stake purchases by LIC during this period.Step 4: IRDAI's approval was specifically required to allow LIC to exceed its usual investment limit in a single company for the IDBI Bank transaction.Step 5: Therefore, the bank referred to in the question is IDBI Bank.

Verification / Alternative check:
Financial newspapers and official press releases from that period clearly describe LIC's acquisition of a majority stake in IDBI Bank. They mention that IRDAI granted a special approval for this stake purchase, noting the approximate capital support figure. None of the other listed banks are part of a similar high profile recapitalisation via LIC, confirming that IDBI Bank is the correct choice.

Why Other Options Are Wrong:
Union Bank of India: Although it has undergone recapitalisation under government schemes, it was not the subject of the LIC stake purchase referred to here.

United Bank of India: This bank later merged with other banks, but there was no equivalent stake purchase by LIC on the same scale.

Indian Bank: A relatively stronger bank among public sector banks, not the one receiving this specific large capital support from LIC.

Thus, these banks do not match the described transaction.

Common Pitfalls:
Students may confuse general government recapitalisation programmes for public sector banks with this specific transaction involving LIC. Another pitfall is assuming that any troubled public sector bank might be the answer without recalling the exact details of the LIC–IDBI deal. To avoid this, it is helpful to remember the simple association: LIC's big stake purchase and management control were in IDBI Bank.

Final Answer:
The bank that received capital support through LIC's major stake purchase is IDBI Bank.