Government-backed Life Insurance Corporation of India (LIC) plans to keep a part of its stake in IDBI Bank, reported Press Trust of India (PTI) via the Economic Times.

In an interview with PTI, LIC chairman Siddhartha Mohanty said the life insurer will also sell its stake in IDBI Bank with the Government of India (GoI), but it may not divest the entire stake.

By retaining a stake, IDBI Bank promotor LIC hopes to leverage its bancassurance alliance with the lender.

“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,” Mohanty said.

LIC and GoI have jointly agreed to divest a 60.7% stake in IDBI Bank.

The government holds more than 45% of IDBI Bank while the life insurance major holds a 49.24% stake in the lender.

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In January 2019, IDBI Bank became a subsidiary of LIC, but it was reclassified as an associate company of the insurer in December 2020.

According to Mohanty, IDBI Bank has made the most contribution to the bancassurance channel.

Under a bancassurance alliance, the insurance provider is permitted to market its products to both bank clients and other people via the bank’s branch network.

Department of Investment and Public Asset Monetisation (DIPAM) secretary Tuhin Kanta Pandey stated earlier this month that the sale of the IDBI Bank holding might not be finished by March 2024.

The divesture is “on course”, but certain requirements must be met such as the RBI’s standards, Pandey added.

LIC has also launched a new digital transformation initiative, called Digital Innovation and Value Enhancement (DIVE).

In the first phase of the DIVE project, LIC will use agents, bancassurance, and direct sales to progressively change its customer acquisition processes.

LIC builds its clientele mostly through its agents.

Following the initial phase, LIC’s other domains and services, such as loans, claims settlement, and other important offerings, will be digitally transformed to ensure client convenience.