LIC to Retain Bancassurance Tie-Up with IDBI Bank Despite Stake Reduction

In a major development, the Securities and Exchange Board of India (SEBI) has approved the reclassification of LIC as a public shareholder in IDBI Bank, following the government’s ongoing strategic divestment of the bank.

As per a CNBC-TV18 report, this approval confirms that LIC will maintain its bancassurance tie-up with IDBI Bank, even after reducing its stake over the next two years.

LIC Stake Sale Plans

Both the government and LIC are planning to divest a combined 60.72% stake in IDBI Bank. LIC is expected to offload roughly 30% of its current 49.24% holding, while the government will sell its portion, reducing overall ownership in the bank.

Despite this reduction, the bancassurance partnership which is critical for LIC’s premium inflows will remain unaffected.

Bancassurance is a partnership between a bank and an insurance company in which the bank sells the insurance company’s products to its customers.

Bancassurance Performance in Q1 FY26

LIC’s bancassurance collaboration with IDBI Bank continues to deliver strong growth. Data for Q1 FY26 shows LIC’s share of New Business Premium (NBP) via IDBI surged to 4.23%, up from 2.59% in Q1 FY25, while premium inflows doubled from ₹435 crore to ₹862 crore.

Importance of the Bancassurance Tie-Up

IDBI Bank remains LIC’s largest bancassurance partner, generating substantial premium volumes. Even as LIC’s equity stake decreases, the revenue stream from bancassurance ensures a cushion for long-term earnings. The strong double-digit growth in Q1 FY26 premiums underlines the strategic importance of this partnership.

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Conclusion

The SEBI approval and continued bancassurance collaboration reinforce LIC’s commitment to leveraging IDBI Bank as a key distribution channel. While the insurer’s equity presence will reduce over time, its revenue-generating partnership remains secure, highlighting the significance of bancassurance in LIC’s growth strategy.

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