new delhi, Aug. 11 -- The Centre is looking to slash its ownership in Life Insurance Corp. of India (LIC) and several public sector banks (PSB) beyond what's mandated by the Securities and Exchange Board of India (Sebi), two people aware of the plans said. The government is looking to hire merchant bankers for three years, extendable by two more years, as it aims to sell the shares over time, the people said on the condition of anonymity. The sale aims to raise money for the government while capitalizing on favourable market conditions. However, majority ownership and management control will remain firmly with the government. "While some PSB stake sales may stretch beyond 2026, the plan is to go past Sebi's requirement over the next three to five years," one of the two people said. "With LIC, the government will try to reach the regulatory level by 2027 and go beyond it later, as it would help bring in capital, though much will depend on market appetite." With PSBs delivering strong performances and record profits in recent quarters, the government sees an opportunity to capitalize in the medium term. Led by State Bank of India, state-run banks cumulatively logged a record profit of Rs.44,218 crore in the June quarter, up 11% from the previous year. Meanwhile, shares of LIC jumped 4% on Friday after the insurer reported a 150-basis-point annual increase in the value of new business (VNB) margin to 15.4% in a seasonally weak quarter. The government currently holds a 96.5% stake in LIC, after selling 3.5% in an initial public offering (IPO) three years ago. Sebi had initially set a May 2024 deadline for LIC to comply with the 10% minimum public shareholding rule; however, this deadline was extended to 16 May, 2027. The LIC stock closed at Rs.912.55 on the BSE on Friday, giving the insurer a market value of roughly Rs.5.77 lakh crore. BNP Paribas, Goldman Sachs and IIFL are vying for the mandate for the LIC share sales, ET Now reported on 25 July. Mint couldn't independently verify these. Meanwhile, five public sector banks-Indian Overseas Bank (94.61% government stake), Uco Bank (90.95%), Punjab & Sind Bank (93.85%), Central Bank of India (89.27%) and Bank of Maharashtra (79.60%)-must reduce government ownership below 75% by August 2026. Only Bank of Maharashtra is expected to meet the deadline, the second person mentioned above said. "The other banks are likely to seek an extension of at least another year to meet the required shareholding norms," the person added. Spokespersons of the ministry of finance, Sebi, LIC and the five PSBs didn't respond to Mint's queries. "Institutional and retail investor interest, both domestic and foreign, continues to be high in the financial services space in India, and hence the plan of diluting government holding seems very much feasible and viable," said Vivek Iyer, partner and financial services risk Leader, Grant Thornton Bharat....