Govt may sell additional LIC stake in FY26

Three years after Life Insurance Corporation’s (LIC) initial public offering (IPO), the Centre may sell another small tranche in the insurance behemoth in 2025-26 to further bolster the market appetite for the stock as well as boost non-tax revenues of the government.

- PRASANTA SAHU

FINANCIAL BIDS FOR the strategic sale of IDBI Bank—the largest in the banking, financial services and insurance (BFSI) space—are expected in May-June after the share purchase agreement (SPA) negotiations come to an end.

The department of investment and public asset management (DIPAM) has received multiple expressions of interest (EOIs) on January 7, 2023, for a total of 60.72% stake in the bank, including 30.48% (approximately ₹23,700 crore at current prices) from the government and 30.24% from promoter LIC, along with the transfer of management control in the bank. The bidders reportedly include Fairfax India (promoter of CSB Bank), Emirates NBD, and Kotak Mahindra Bank.

An official said that after security clearance from the home ministry and a fit and proper evaluation by the Reserve Bank of India, the qualified bidders' due diligence on IDBI Bank is almost complete. "Draft SPA is being finalised," the official said, adding that the final SPA negotiations will take some time to conclude.

To make the sale smooth, the government has to give assurance in the SPA that the potential buyer would have a free hand in running of the bank, such as a change in management, etc. According to the Banking Regulation Act, 1949, the voting rights of a shareholder or shareholders acting in concert in a bank can't exceed 26% even if they own more than 26%.

While deciding the terms and conditions of the strategic sale, legitimate concerns of current employees and other stakeholders have been suitably addressed through appropriate provisions made in the SPA.