Boost for LIC in IDBI Bank divestment: Bancassurance to continue despite stake reduction

In a major development, 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, following the government’s ongoing strategic divestment process.Sources tell CNBC-TV18, that LIC will continue with its bancassurance.

The approval brings important implications for LIC’s foothold in the bank, while also ensuring that the bancassurance tie-up remains intact.

As per sources, the bancassurance partnership between LIC and IDBI Bank will continue even after LIC’s stake in IDBI Bank falls below 15% which the insurers is supposed to do over the next two years.Government and LIC to offload over 60% stake

As things advance, both the government and LIC plan to divest around 60.72% of IDBI Bank. LIC offloading approximately 30% of its current 49.24% stake, while the government will sell its portion.Data for Q1 FY26 shows LIC’s bancassurance share in its New Business Premium (NBP) surged to 4.23%, up from 2.59% in Q1 FY25. Premium inflows doubled—from ₹435 crore to ₹862 crore.

Why the bancassurance tie‑up matters?

IDBI Bank remains LIC’s largest bancassurance partner, delivering significant premium volumes.

Even as LIC’s equity stake shrinks, the revenue from bancassurance stays intact, cushioning its long-term earnings.

The double-digit gain in Q1 FY26 premium stresses how vital this stream remains.