SEBI Clears LIC's Public Shareholder Status in IDBI Bank

By siliconindia  |  Monday, August 25, 2025

SEBI Clears LIC's Public Shareholder Status in IDBI Bank
  • SEBI approves LIC’s reclassification as a public shareholder in IDBI Bank.
  • LIC’s voting rights will be limited to 10% after strategic disinvestment.
  • IDBI Bank shares rise 1.33% amid progress in disinvestment process.

Shares of IDBI Bank rose 1.33% after the Securities and Exchange Board of India (SEBI) approved Life Insurance Corporation of India’s (LIC) reclassification as a public shareholder. This move is a key step in the ongoing strategic disinvestment of the bank, originally approved by the Cabinet Committee on Economic Affairs in May 2021.

Following SEBI's nod, the Department of Investment and Public Asset Management (DIPAM) announced that LIC, currently a key stakeholder in IDBI Bank, will have its voting rights capped at 10% post-disinvestment. LIC will not hold any special rights, board representation, or decision making authority in the bank after its reclassification.

The Reserve Bank of India (RBI) has also directed LIC to reduce its remaining shareholding in IDBI Bank to 15% or less within two years of the transaction’s closure. Once the disinvestment is finalized, IDBI Bank will apply to stock exchanges to formally reclassify LIC as a public shareholder.

This reclassification must comply with all SEBI guidelines, including Regulation 31A (4) of the Listing Regulations. If these conditions are not fully met, SEBI’s approval could be withdrawn.

Also Read: IDBI Bank to introduce financial planning services

The move is seen as part of a broader push by the Indian government to reduce its stake in public sector enterprises and encourage private participation in the banking sector. IDBI Bank, originally established in 1964 as a development finance institution, became a full-fledged bank in 2004 and was reclassified as a private sector bank in 2019 after LIC acquired a controlling stake.

Despite some recent volatility, the market responded positively to the regulatory update. IDBI Bank shares closed at Rs 94.90 in the last session, having earlier gained 1.33% during the day.

 

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