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BFSI – LIC Stake sale, MDR Proposal, third party insurance

ICICIdirect Research 07 Aug 2026 DISCLAIMER

LIC OFS keeps FY27 disinvestment target on track

  • The government’s successful 6.5% stake sale in LIC, raising ~₹31,550 crore, marks the largest disinvestment transaction of FY27 and significantly advances progress towards the ₹80,000 crore disinvestment target. The OFS also enabled LIC to achieve the minimum 10% public shareholding requirement, while taking cumulative FY27 disinvestment receipts to over ₹52,000 crore, implying nearly 65% of the annual target has already been achieved.
  • Looking ahead, the strategic sale of IDBI Bank remains the key catalyst, with the government’s 30.5% stake expected to fetch ~₹35,000–37,000 crore. We believe the strong execution of the LIC OFS, coupled with the pending IDBI Bank transaction, keeps the FY27 disinvestment target well within reach.

MDR proposal could improve UPI monetization

  • As per media reports, the government is considering the reintroduction of Merchant Discount Rate (MDR) on select high-value UPI transactions, likely in the range of 25–30 bps for transactions above ₹2,000 at large merchants. Although such transactions accounted for only ~4% of UPI volumes in FY26, they contributed nearly 67% of the total transaction value, making the proposal meaningful from a revenue perspective.
  • Industry estimates suggest the proposed MDR could generate ₹5,000–13,000 crore in annual revenue, helping bridge the ₹10,000–12,000 crore annual cost of operating the UPI ecosystem, against the current government incentive of only ~₹2,000 crore. If implemented, the move would be a key positive for payment ecosystem players such as Paytm, One MobiKwik and Pine Labs, improving the long-term sustainability of the digital payment ecosystem.

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