According to documents reviewed by The Hindu, the IDBI Bank has done a backward integration of its systems with LIC — a move aimed at bringing synergy. This will give LIC access to the data of IDBI Bank’s 246 lakh customers.
The Reserve Bank of India (RBI) is probing a suspected breach of client confidentiality by IDBI Bank. The allegation is that the bank gave access to its client data to the Life Insurance Corporation of India (LIC), which owns 51% stake in the bank.
According to documents reviewed by The Hindu, the IDBI Bank has done a backward integration of its systems with LIC, aimed at bringing synergy. This will give LIC access to data of the Bank’s 246 lakh clients. The RBI identified the issue during an inspection.
RBI rules further mandate while considering requests for data or information from government and other agencies, banks shall satisfy themselves that the information being sought is not of such a nature as will violate the provisions of law relating to secrecy in the banking transaction.
In January this year, LIC completed the acquisition of 51% stake in IDBI Bank from the government. In order to chalk out synergies for the deal, a task force was formed comprising senior officials from both the entities.
As part of the synergy, IDBI Bank had started selling insurance products of LIC to its customers. The bank expected, that with all the synergies, it will add ₹1,000 crore to the bottom line.
LIC chairman M.R. Kumar, who is also the chairman of IDBI Bank, has said in the bank’s annual report that various areas of mutual synergies had been chalked out.
“The mutual synergies are expected to provide a further impetus to the bank’s effort in ramping up its retail business,” Mr. Kumar had said.