IDBI Bank has decided to divest its stake worth INR5.95bn ($78.7m) in its insurance joint venture (JV) with Ageas and Federal Bank.

The board of directors of the bank has approved the stake sale in IDBI Federal Life Insurance Company Limited (IFLI) to the two partners.

The deal, however, is subject to regulatory approvals and other approvals.

The bank, according to the Free Press Journal, in its filing to exchange said that it will sell up to 23%stakes of IFLI to Ageas and up to 4% to Federal Bank.

IDBI Bank, which currently holds a 48% stake in the venture, will reduce its stake to 21% with the lastest stake sale.

Meanwhile, the sale is expected to provide Federal Bank with up to 30% and Ageaswith around 49% holding in IFLI.

Last year, the state-ownedLife Insurance Corporation (LIC) obtained 51% controlling stake in the IDBI. The bank was required to divest its holding in the insurance joint venture to meet regulatory requirements.

India’s insurance regulations don’t allow an insurer to hold over 10% stake in another insurance company.

Meanwhile, the Government of India is expected to delay its the divestment of its residual stake in IDBI Bank until next year due to low valuations resulting from Covid-19 pandemic.

The government is also planning to sell its stake in LIC through an Initial Public Offering (IPO).

The plans to divest residual stake in IDBI Bank and release LIC shares for IPO was announced as part of the 2020-21 Union Budget in February.