Govt To Sell 6.5% LIC Stake in Phases, Plan Aims at Meeting SEBI Norms

New Delhi: The Indian government is planning to sell a 6.5 percent stake in Life Insurance Corporation (LIC) of India. This will be done in several small parts over the next two years. A recent report by Business Standard shared this information. The decision is part of a larger plan to sell shares in public sector companies during this financial year.

This move is mainly to follow the rules set by the stock market regulator, SEBI. SEBI has a rule called the Minimum Public Shareholding (MPS) requirement. It says that all listed companies must have at least 25 percent of their shares held by the public.

Arunish Chawla, who is the Secretary of the Department of Investment and Public Asset Management (Dipam), spoke about this plan. He said that the government will carry out small Offers for Sale (OFS) regularly through the year. He added that people will be informed in advance, so small investors can get ready and take part.

Most public sector companies have already met the 25 percent public shareholding rule. But some still need to catch up. These are mostly companies in defence, railways, and the financial sector. Chawla said the government is working faster to sell shares in these companies too. The goal is to meet all the SEBI rules by next year.

For example, public-sector banks like Bank of Maharashtra and UCO Bank must meet the 25 percent public holding rule by August 2026. LIC has a bit more time. SEBI has allowed LIC to increase its public shareholding to 10 percent by May 16, 2027.

LIC was listed on the stock market in May 2022. At that time, the government sold a 3.5 percent stake. The new plan to sell another 6.5 percent will be done slowly, in small parts. This way, it won’t hurt the stock market. Also, it gives small investors more chances to take part.

Selling a 6.5 percent stake in LIC could bring the government around Rs 35,256 crore, based on current market prices. This money can help with government spending and reduce the fiscal deficit.

Chawla said that careful planning will ensure the market stays stable and that all investors, big and small, get a fair chance to invest.

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