The government also tweaked the personal tax structure in the budget.
The government owns 100% stake in LIC, which was set up in 1956 and remains the country's largest state-run insurer.
She said that the deposit insurance cover will be hiked to Rs. 5 lakh from the current Rs. 1 lakh.
According to Krishna Kumar Karwa, Managing Director, Emkay Global Financial Services, the LIC IPO will be a big positive for corporate governance and transparency and will open up one more avenue for fund raising for the government over the years.
IDBI Bank has been weighed down by poor asset quality with its gross non-performing assets standing at 29.4% in the quarter ended September 30, when it also posted a loss of 34.59 billion rupees. "The government's intention is to get out of IDBI Bank", said Atanu Chakraborty (secretary) ministry of finance, Department of Economic Affairs.
The government has proposed to sell part of its holding in LIC, India's biggest institutional investor, by initial public offering (IPO).
"In order to provide greater access to financial markets, unlock true value and induce market discipline, the Government has proposed sale of a part of its holding in LIC by way of Initial Public Offer (IPO)", Sitharaman said during her Budget speech that lasted more than 2.5 hours. It will have to amend the LIC Act first before taking the Corporation public. For the April to December 2019 period, LIC collected new premiums of Rs 1.37 lakh crore, showing a 45.5 percent year-on-year (YoY) rise, its market share was 71 per cent. LIC Annual Report 2018-19 showed that the income from investments stood at Rs 2.21 lakh crore at the end of FY19. At even 25-30 per cent of its AUM, the company can be valued at around Rs 8-10 lakh crore.