Government to Sell 6.5% Stake in LIC Over Two Years
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The Indian government is planning to sell a 6.5% stake in Life Insurance Corporation (LIC) of India gradually, over the next 24 months. This means they won’t sell all the shares at once but will divide the sale into smaller parts spread out over two years. This plan is part of a bigger effort to sell shares in various central public-sector companies (CPSEs) this financial year. The goal is to meet the minimum public shareholding rules set by the stock market regulator.
What is Minimum Public Shareholding (MPS)?
MPS rules require that at least 25% of shares in listed government companies should be owned by the public (non-government investors). Most government companies have already met this rule, but some companies in sectors like defence, railways, and finance still need to increase their public shareholding.
How Will the Government Sell LIC Shares?
According to Arunish Chawla, Secretary of the Department of Investment and Public Asset Management (DIPAM), the government will follow a strategy of regular small offers for sale (OFS). This approach helps small investors get a chance to buy shares, instead of big investors buying all at once. He also mentioned that this strategy gives small investors clear information in advance so they can plan to participate.
Deadline for Public Sector Banks and LIC to Meet MPS Rules
Some public sector banks such as Bank of Maharashtra and UCO Bank have until August 2026 to reach the 25% public shareholding requirement. For LIC, the stock market regulator (Securities and Exchange Board of India or SEBI) has allowed the company to increase its public shareholding to 10% by May 16, 2027. LIC first became a publicly listed company in May 2022 when the government sold 3.5% of its shares.
Expected Revenue from LIC Stake Sale
The 6.5% stake sale in LIC is expected to bring in around ₹35,256 crore based on the current market price. The government plans to carefully time these sales to maintain good liquidity in the market and to ensure fairness for smaller investors.
