The Insurance Regulatory and Development Authority of India (Irdai) on Friday said it will set the timeline to reduce LIC's shareholding in IDBI Bank from 51 per cent to 15 per cent.

However, it added that the timeline will only be set after looking at LIC's business plan post-acquisition of 51 per cent stake in debt-ridden IDBI Bank.

LIC currently holds 7.98 per cent in debt-ridden IDBI Bank, and is in the process of increasing its stake to 51 per cent, which would help it enter the banking space.

The insurance regulator in June had permitted LIC to increase its stake to 51 per cent in IDBI Bank. The government, which currently holds 85.96 per cent in IDBI Bank, had also approved the LIC's proposal to hike stake last month.

The permissible limit for insurance companies to hold stake in any listed entity is 15 per cent at present.

"We will look at their (LIC's) business plan (post acquisition of 51 per cent stake in IDBI Bank) and then decide on reduction of its stake in IDBI Bank (to 15 per cent)," Irdai chairman S C Khuntia told reporters on the sidelines of an insurance summit organised by Assocham.

"LIC will have to safeguard the interest of policyholders while reducing it's stake in the bank," he said.

On Tuesday, the LIC board had said it has taken a decision on the modalities of increasing stake in IDBI Bank to 51 per cent.

The national insurer is also in the process of picking up an additional 7 per cent stake in IDBI Bank through preference shares. With this, its total holding in the bank would rise to 14.9 per cent, from 7.98 per cent at present.