Reserve Bank of India, the central bank of the country, has granted approval to Life Insurance Corporation of India (LIC) to increase its stake in privately-owned lender Kotak Mahindra Bank.

The government-owned insurance giant, which currently owns 4.96% in the lender, will increase its stake to 9.99%.

“We wish to inform you that Kotak Mahindra Bank has received an intimation from Life Insurance Corporation of India stating that the Reserve Bank of India had granted its approval to UC, for increasing its holding in the bank up to 9.99% of the paid-up equity share capital of Bank,” the lender said in a regulator regulatory filing.

The approval by RBI is valid for one year.

As per RBI’s norms, any person or institution willing to acquire over a 5% stake in a private bank must take approval from the central bank.

Last week, RBI made changes to the rules on the ownership and corporate structure of private sector banks.

While announcing the changes, RBI stated that shareholding for individuals and non-financial groups will be capped at 10%.

As per Reuters’ report, the RBI is not in favour of allowing corporate ownership of private lenders in the country.

Meanwhile, LIC is planning to launch its initial public offering by March next year, which could value the insurer at $109bn.

As per Bloomberg’s report, the insurer is looking to raise $13.6bn (INR1 trillion) on the upper end via its IPO.