Government Sets Sights on Minority Stake Sales in LIC and Financial Institutions

The government has taken a decisive step towards reducing its stake in Life Insurance Corporation (LIC) and other public financial entities by appointing merchant bankers and legal advisors. This initiative, overseen by the Department of Investment and Public Asset Management (DIPAM), aims to ensure compliance with mandated public shareholding norms set by the Securities and Exchange Board of India (Sebi).

According to Arunish Chawla, DIPAM Secretary, the selection process for merchant bankers and legal advisors has been completed. These experts will work across all financial institutions, helping the government divest its stakes efficiently over the next three years. The move comes after DIPAM's February invitation for bids from potential advisors.

Currently, many public sector banks and financial institutions do not meet the 25% public shareholding requirement. With a government deadline of August 1, 2026, looming, the need to offload stakes is urgent. For LIC, the government aims to meet a 10% public shareholding by May 16, 2027, having already sold a portion via IPO in May 2022.

(With inputs from agencies.)