SEBI Approves Reclassifying LIC's Stake in IDBI Bank as Public Shareholder

The Securities and Exchange Board of India (SEBI) has approved the reclassification of Life Insurance Corporation of India (LIC) as a public shareholder in IDBI Bank. The move is linked to the government’s strategic disinvestment process and is subject to certain conditions.

Conditions Attached

SEBI has limited LIC’s voting rights to 10% of the lender’s total net effective voting rights, despite its equity stake of 49.24% as of June 2025. LIC will not exercise direct or indirect control over the bank and will not hold any board representation, special rights, or managerial positions. The approval will lapse if these conditions are not followed.

Requirement on Stakeholding

In addition to voting restrictions, LIC must reduce its shareholding in IDBI Bank to 15% or below within 2 years of the strategic sale. This requirement is in line with Reserve Bank of India guidelines on promoter holdings in banks.

Disinvestment Details

The Cabinet Committee on Economic Affairs had approved the strategic disinvestment of IDBI Bank in May 2021. The government, which owns 45.48%, and LIC, which holds 49.24%, together plan to sell a 60.7% stake, as per news reports. Due diligence has already been completed, and the Department of Investment and Public Asset Management has said financial bids will likely be invited between October and December 2025.

Once the disinvestment process is completed, IDBI Bank will be required to apply to the stock exchanges for the formal reclassification of LIC as a public shareholder. LIC was earlier classified as a promoter after acquiring control of IDBI Bank in 2019.

Read more: IDBI Bank Shares Surge 9% as Divestment Nears Key Milestone!

IDBI Bank Share Price Performance 

As of 10:05 AM on August 25, 2025, IDBI Bank share price was trading at ₹96.10, up 1.16% from the previous close price. The stock has gained close to 25% so far this year.

Conclusion

The reclassification shifts LIC from promoter to financial investor, removing its management influence and fulfilling one of the key requirements for IDBI Bank’s privatisation.

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