Govt Plans To Sell Big Stakes In LIC & 5 Banks, Record Profits Give Boost To Disinvestment Drive

New Delhi: The Indian government is preparing to sell a significant portion of its stake in LIC (Life Insurance Corporation) and five public sector banks, according to a report by Mint. This move is aimed at meeting SEBI’s public shareholding norms, which require that promoters hold no more than 75 percent in listed companies.

Currently, the government holds more than 90 percent stake in these entities, which is well above the SEBI limit.

LIC Holds 96.5 percent Government Stake, SEBI Deadline Extended to 2027

In LIC, the government still owns 96.5 percent, after selling just 3.5 percent via IPO in 2022. LIC’s market capitalization stands at around ₹5.66 lakh crore. As per SEBI rules, LIC needs to ensure at least 10 percent public shareholding.

SEBI initially gave a deadline of May 2024, which was later extended to May 2027 to give more time for stake reduction.

On Monday, LIC shares were trading at ₹895.60, down 1.86 percent on the BSE.

Five PSU Banks Also on the Disinvestment List

Along with LIC, the government plans to reduce stakes in five public sector banks where its ownership is above 75 percent. These banks include:

- Indian Overseas Bank – 94.61 percent

- UCO Bank – 90.95 percent

- Punjab & Sind Bank – 93.85 percent

- Central Bank of India – 89.27 percent

- Bank of Maharashtra – 79.60 percent

As per SEBI rules, the government must bring these holdings down to 75 percent or less by August next year. Only Bank of Maharashtra is expected to meet the deadline. Other banks may request for a deadline extension.

Record Profits Make Disinvestment Attractive

This decision comes after strong financial results from public sector banks. In the June 2025 quarter, these banks reported a record profit of ₹44,218 crore, which is 11 percent higher than the same quarter last year.

Seeing this strong performance, the government is now preparing to hire merchant bankers to manage the stake sale process.