Life Insurance Corporation of India (LIC) has made an open offer to purchase a 26% equity stake in debt-ridden state-owned lender IDBI Bank.

The insurer offered to buy the stake for over INR126bn ($1.7bn), at INR61.73 a share.

Altogether, the insurer plans to buy more than 2.04 billion equity shares of the bank worth INR10 a piece. In addition, the amount offered for the stake will be paid in cash.

Simultaneously, the bank’s board gave the green light to issuing preferential shares to the firm in order to increase the insurer’s stake in the bank.

At the same time, the board approved raising the bank’s authorised capital from INR80bn to INR150bn.

A proposal for LIC’s re-classification as promoter of the bank was also approved.

“The board of directors of the target company (IDBI Bank) in their meeting held on October 4, 2018 have authorised the preferential allotment representing up to 51 per cent of the fully diluted voting share capital (preferential issue) in favour of the acquirer (LIC) along with the acquisition control,” IDBI said in a filing.

Earlier this year, India’s Union Cabinet has given the go-ahead to the acquisition of IDBI Bank, paving way for the stake in the bank to rise to 51%.

The proposal also secured the nod of the Insurance Regulatory and Development Authority of India (IRDAI).