Key Highlights:

  • RBI Approval Granted: The Reserve Bank of India has approved LIC to acquire an aggregate holding of up to 9.99% of ICICI Bank's paid-up share capital or voting rights.
  • One-Year Window: LIC must acquire the stake within one year from the September 4 approval letter, or the approval will stand cancelled.
  • Conditions Apply: The approval comes with conditions, including compliance with applicable statutory and regulatory provisions, and does not mean LIC's holding has immediately increased.
  • A Pattern With HDFC Bank: This follows a similar RBI approval last month allowing LIC to acquire up to 9.99% of HDFC Bank, where it already held a 4.11% stake as of August 14.
  • Market Snapshot: LIC shares closed at Rs 415.25 (down over 1%) on Friday, while ICICI Bank shares settled at Rs 1,423, down 0.14%.

The Reserve Bank of India (RBI) has approved state-owned insurer Life Insurance Corporation of India (LIC) to acquire an aggregate holding of up to 9.99 per cent of the paid-up share capital or voting rights in ICICI Bank, the private lender said in a regulatory filing on Saturday.

ICICI Bank said it received a copy of the RBI's approval letter — dated September 4 — at 9:09 pm the same day.

The approval allows LIC to acquire the stake within one year from the date of the RBI's letter, failing which it will stand cancelled. It is also subject to conditions, including compliance with applicable statutory and regulatory provisions, the bank said. Importantly, the central bank's nod does not mean LIC has immediately increased its holding to 9.99 per cent — any actual acquisition will still need to follow the conditions RBI has laid down, along with other regulatory norms.

Why RBI approval is even needed: Under RBI's Master Direction on Ownership in Private Sector Banks, any single investor — including institutional investors like LIC — must seek prior central bank approval before crossing a 5 per cent shareholding threshold in a private bank. This is designed to prevent concentration of ownership and control in India's private banking sector, and explains why LIC needs a fresh RBI clearance each time it wants to build a stake beyond that mark in a given bank, rather than being free to buy shares without limit like a retail investor.

This isn't the first such approval LIC has sought this year. In a separate development last month, RBI approved LIC's application to acquire up to 9.99 per cent of HDFC Bank's paid-up share capital or voting rights; HDFC Bank had said LIC held 4.11 per cent of its total share capital as of August 14. LIC has previously received similar 9.99 per cent clearances for other private banks as well, including IndusInd Bank and Kotak Mahindra Bank, reflecting a broader pattern of the insurer periodically seeking headroom to raise its exposure across India's private banking space, subject to RBI's case-by-case review each time.

The ICICI Bank approval effectively gives LIC similar flexibility, letting it raise its holding in the private lender if and when it chooses to, within the one-year window and applicable regulatory conditions.

On market movements, shares of LIC ended Friday at Rs 415.25, down more than 1 per cent on the BSE, having touched a 52-week high of Rs 468.30 and a 52-week low of Rs 361. ICICI Bank shares closed at Rs 1,423, down 0.14 per cent on the same exchange, with a 52-week high of Rs 1,479.90 and a 52-week low of Rs 1,187.55.