The Life Insurance Corporation of India wants to buy UTI out of UTI Bank. This is despite HSBC having picked up a 14.71 per cent in the bank from CDC Financial Services and South Asia Regional Fund. HSBC plans to raise its stake in UTI Bank to 20 per cent.

"We are interested in UTI Bank, but much depends on the price at which UTI decides to offload its holding," said a senior LIC executive.

LIC had recently shown interest in acquiring UTI's 33.46 per cent stake in UTI Bank, sensing the imminent divestment of UTI's strategic holdings in various entities. "There is no change in the plan following HSBC buying out the CDC stake," the executive said.

LIC raised its shareholding in UTI Bank from 4 per cent to 13.5 per cent a couple of months ago, when it bought shares from the market at less than Rs 50 per share.

Since then, it has been waiting for the Union government to decide on the fate of UTI and its subsidiaries before approaching the Insurance Regulatory and Development Authority for special permission to take more than a 20 per cent stake in the bank.

Should LIC acquire UTI's entire stake, its holding in the bank will climb to 46 per cent. According to the IRDA Act, an insurance company cannot hold more than 20 per cent in an entity without the regulator's "special" approval. In the past, LIC had taken special approval from IRDA while hiking its stake in Corporation Bank to 27.02 per cent.