Union Finance Secretary Rajiv Kumar said that the initial public offer of state-owned Life Insurance Corporation may be done in the second half of the 2020-’21 financial year, PTI reported. Finance Minister Nirmala Sitharaman had in her Budget presentation on Saturday proposed a stake sale in the LIC.

An initial public offer refers to the process of offering shares in the stock market. Public share issuance allows a company to raise capital from public investors.

Kumar said on Sunday that a number of processes have to be followed for the listing and some legislative changes would also be required. “We will follow the extant procedure for listing and for other things including the legislative changes it requires in consultation with the Ministry of Law and that process we already started ... listing in the second half of FY21 seems logical,” he said.

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The finance secretary said the stake sale of LIC will bring in greater transparency, public participation and deepening of the equity market. However, Kumar was not clear about the quantum of stake sale, saying it could be 10%. Currently, the government owns 100% stake in the insurance company.

“Listing of companies on stock exchanges discipline a company and provides access to financial markets and unlocks its value,” Sitharaman had said in her Budget speech. “It also gives opportunity for retail investors to participate in the wealth so created. The government now proposes to sell a part of its holding in LIC by way of initial public offer.”

LIC is currently the country’s largest insurer, with a market share of 76% of the policies and 71% of the first-year premiums.

Sitharaman also proposed on Saturday that the government will sell its stake in IDBI Bank to private investors and amend the Banking Regulation Act to strengthen co-operative banks. IDBI Bank is a subsidiary of LIC, as the insurance firm acquired a controlling stake in the bank in 2019.