Mumbai: India’s government is likely to sell a part of its stake in IDBI Bank Ltd as early as July and potential buyers include the country’s top insurer, said people familiar with the matter. Potential investors would include Life Insurance Corporation (LIC), the people said, asking not to be identified as the information isn’t public. The IDBI stake sale would lower the government’s stake to below 50% from about 81%, they said.

India has been trying since at least two years to sell IDBI Bank, which has the highest bad loan ratio among state-run lenders in India. India Ratings & Research Pvt. Ltd, the local unit of Fitch, downgraded IDBI Bank this month citing a sharp deterioration in asset quality.

Exact details of the potential sale haven’t been agreed yet and there’s no certainty the talks will lead to a transaction, the people said. ET Now television channel had reported the possible deal earlier Friday.

IDBI Bank’s shares rose 5.95% to Rs61.15 its biggest intraday percentage gain since 7 June. The 10-member Bankex Index was little changed.

M.K. Jain, who was brought in as chief executive officer of IDBI Bank last year to tackle the bad loan problem, was recently named deputy governor of Reserve Bank of India. B. Sriram, managing director of State Bank of India, the country’s biggest lender, was given additional charge as head of IDBI Bank effective June 21, exchange filings show.

Non-performing assets (NPAs) at IDBI Bank stood at 28% as of March 31 while profitability as measured by return on assets dropped to a negative 6.68%, filings show. Bloomberg