India-based IDBI Bank has reached a deal to transfer its mutual fund schemes operating under the name of IDBI Mutual Fund to LIC Mutual Fund.

The move enables the bank, majority of which is owned by Life Insurance Corporation (LIC), to comply with the Securities and Exchange Board of India (SEBI) guidelines.

In an exchange filing, IDBI Bank said: “In terms of Regulation 30 of the (LODR) Regulations, 2015, we hereby advise that on 29 December 2022, a Scheme Transfer Agreement (STA) has been signed between IDBI Mutual Fund and LIC Mutual Fund for transfer of schemes of IDBI MF to LIC MF to comply with regulation 7B of SEBI mutual fund regulations.”

As per SEBI rules, a single promoter cannot own a stake of over 10% in two asset management firms, reported Moneylife.

SEBI also mandated that in case of a merger or acquisition, promoters of the mutual funds have to abide by these norms within a year of the deal, reported The Hindu businessline.

This clause was activated after LIC bought IDBI Bank in January 2019.

In the past, at least two attempts were made to sell IDBI Mutual Fund. However, these attempts did not succeed, ultimately leading to the merger with a firm owned by the same parent.

LIC MF is said to manage over INR180bn ($2bn) in assets, with a strong presence in the debt and passive equity products segment.

IDBI MF claims to have more than INR38bn in assets, with a focus in the actively managed equity funds sector.