Economy & BankingArticle 12 of 13

Government to Sell up to 2% LIC Stake to Raise about ₹10,000 Crore

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The Government of India plans to sell up to a 2% stake in Life Insurance Corporation of India (LIC), potentially raising around ₹10,000 crore. The transaction is expected in late June or early July 2026. The objective is to deepen public shareholding in LIC (currently 96.5% government-owned) and meet asset monetisation targets. Merchant bankers were appointed last year for the divestment.

Key Facts & Details

8 points
  • 1
    Stake sale: up to 2% of Life Insurance Corporation
  • 2
    Target proceeds: about ₹10,000 crore
  • 3
    Aim: deepen public shareholding and aid asset monetisation

Deep Dive

  • +
    LIC was established on 1 September 1956 by the LIC Act, 1956 after nationalisation of 245 insurance companies
  • +
    LIC's ₹21,000 crore IPO in May 2022 was the largest ever in India
  • +
    SEBI rules require listed PSUs to achieve at least 25% public shareholding within stipulated timelines
  • +
    DIPAM (Department of Investment and Public Asset Management) handles divestment transactions
  • +
    LIC manages assets exceeding ₹50 lakh crore, making it India's largest institutional investor
Q

Exam Focus

Likely MCQ: In which year was the Life Insurance Corporation of India established? → Answer: 1956

Related Topics

LICDisinvestmentCapital Markets

Exam Relevance & Angle

PSU divestment, LIC, IPOs and capital markets are repeat questions for Banking, RBI Grade B and Insurance exams.

Target Exams

SBI POSBI ClerkIBPS POIBPS ClerkRBI Grade BLIC AAONIACL AO

Background & Context

Life Insurance Corporation of India (LIC) was set up on 1 September 1956 under the LIC Act, 1956, following the nationalisation of 245 private life insurers. LIC remained the sole life insurer in India until the sector was opened up in 2000 under the IRDA Act, 1999.

LIC made its historic IPO in May 2022, raising about ₹21,000 crore — the largest IPO in Indian history. The government sold a 3.5% stake at that time. Even after listing, the government retains around 96.5% shareholding.

Divestment of central PSUs is handled by the Department of Investment and Public Asset Management (DIPAM) under the Ministry of Finance. The government uses divestment proceeds to fund capital expenditure and meet fiscal-deficit targets. SEBI's Minimum Public Shareholding (MPS) norms require listed companies to maintain at least 25% public float.

Related GK Concepts

Must Know
LIC Act 1956DIPAMMinimum Public ShareholdingIRDAIPSU DivestmentOffer for Sale

Test Yourself

1 / 3

In which year was the Life Insurance Corporation of India (LIC) established?

This topic is important for:

SBI PO

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SBI Clerk

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IBPS PO

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Government to Sell up to 2% LIC Stake to Raise about ₹10,000 Crore — Current Affairs 2026-05-28