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SEBI Approves Reclassification of LIC as a Public Shareholder in IDBI Bank.

Banking & Finance | Dated: 27 Aug 2025

The Securities and Exchange Board of India (SEBI) has approved the request of Life Insurance Corporation of India (LIC) to be reclassified from a promoter shareholder to a public shareholder in Industrial Development Bank of India (IDBI Bank), marking a key step in the bank’s privatization process.

🎯 Key Highlights:

  • - In August 2025, SEBI gave its nod for the reclassification move, which comes as a pre-condition for the privatization of IDBI Bank. As of June 2025, LIC held a 49% stake in IDBI Bank, making it one of the largest shareholders alongside the Government of India (GoI).
  • - The reclassification requires LIC to comply with strict SEBI conditions, including voting rights capped at 10%, no direct or indirect control over IDBI Bank, absence of board representation, and a compulsory reduction of its stake to 15% or less within two years.

💡 Other Important Facts:

  • (i) SEBI has clearly stated that non-compliance by LIC with these conditions will lead to the automatic cancellation of the reclassification status, thereby impacting the ongoing privatization roadmap of IDBI Bank.
  • (ii) As part of the disinvestment plan, the Government of India and LIC together hold 94.72% stake in IDBI Bank, with GoI holding 45.48% and LIC holding 49.24%. Both stakeholders have agreed to jointly divest 60.7% of their stake through a strategic sale.
  • (iii) The financial bidding process for IDBI Bank’s privatization is scheduled to take place between October and December 2025, making this SEBI approval a critical milestone in India’s broader banking sector reforms and disinvestment agenda.

📚 Test Your Knowledge:

Recently, SEBI approved the reclassification of LIC from a promoter shareholder to a public shareholder in which bank?

Correct Answer: IDBI Bank

🚀 Quick Recap:

About SEBI

  • Chairperson: Tuhin Kanta Pandey
  • Headquarter : Mumbai