State-owned Life Insurance Corporation (LIC) intends to retain a part of its stake in IDBI Bank to harness the benefits of the bancassurance.

LIC will divest its stake in IDBI Bank along with the government but will not exit completely, 

"We have made it clear that IDBI Bank is our number one partner in bancassurance. We will retain some stake in IDBI Bank so that the bancassurance partnership continues," LIC chairman Siddhartha Mohanty told news agency PTI.

LIC, the life insurance behemoth, and the government have jointly decided to sell 60.7% stake in IDBI Bank. While LIC owns 49.24% stake in IDBI Bank, the government has a 45% shareholding in the lender.

IDBI Bank became a subsidiary of LIC with effect from 21 January 2019, after the acquisition of an additional 82,75,90,885 equity shares.

On 19 December 2020, IDBI Bank was reclassified as an associate company due to the reduction of LIC shareholding to 49.24%, following the issuance of additional equity shares by the bank under a qualified institutional placement (QIP).

IDBI Bank has been the strongest contributor to the bancassurance channel, Mohanty told PTI. For the bancassurance arrangement to continue, LIC may not be required to hold the entire stake, he added.

Bancassurance is an arrangement between a bank and an insurance company, allowing the latter to sell its products to the bank's customers and others through the branch network.

Earlier this month, Department of Investment and Public Asset Monetisation (DIPAM) secretary Tuhin Kanta Pandey said the stake sale in IDBI Bank may not be completed by March 2024.

The transaction is "on course", but there are aspects like the RBI's fit and proper criteria, which need to be complied with, Pandey said, adding, "We practically don't think that before March, we can conclude it (IDBI Bank stake sale)".

What about the concerns of shareholders on the low price of LIC shares post-listing? "We are very much concerned about the interest of our shareholders and taking steps to create margin by adopting various means, including by changing product mix," Mohanty told PTI.

Post listing, there has been a directional change in LIC's approach with regard to product mix, channel mix and digital intervention, he noted.

Share movement is a function of many things, he said, adding that "as management, we are committed to create shareholders value, and in that direction, we are working".

To instill confidence among foreign investors, LIC had conducted a non-deal roadshow in the US, UK, Singapore and Hong Kong earlier this year.

The non-deal roadshow got a good response and most investors evinced a lot of interest in LIC, Mohanty told PTI.

Mohanty expressed hope that FIIs will also take interest because they are observing quarterly performance. Once they are convinced, money will flow, he said.

A few days back, Mohanty had said that LIC was exploring the possibility of setting up its own fintech arm as part of a potential business model and a consultant has been appointed to steer the project. The fintech arm would help LIC to reach new customers, improve its operational efficiency and develop new products and services.