State-owned insurance company Life Insurance Corporation (LIC) is reportedly in talks with public sector banks to sell the 35% stake held by Japanese Nomura in LIC Nomura MF. 

The issue is likely to become clearer after the LIC board meets on 28 October, sources close to the development told PTI.

LIC is not looking to raise its stake in the mutual fund joint venture with Nomura, according to the sources.

"LIC, which holds 45 per cent stake in the JV, is in no mood to increase this and therefore has started talking to state-owned lenders for selling the 35 per cent stake held by Nomura," the sources said.

LIC Housing Finance, the housing finance arm of the insurer, owns 20% stake in the venture. 

LIC Nomura MF had assets under management (AMU) worth about Rs 11,157 crore as of 30 September. It was the 19th biggest player among domestic mutual funds in India.

On the other hand, Nomura India is likely to cease renewing its five-year contract with LIC and also plans to come out of mutual fund business in India. The five-year contract ends early next year.

If Nomura does so, it will be the 10th overseas firm to exit the "crowded" domestic mutual fund market. Currently, 43 firms operate in the market.

US-based financial major Goldman Sachs on Wednesday said that it would sell its mutual fund business to Anil Ambani's group company, Reliance Capital AMC.

A few public sector banks including Bank of India, Punjab National Bank (PNB) and Central Bank haven't forayed into MF business so far, while many other state-run banks run mutual fund business.

"LIC will first try to woo those lenders, who do not have MF units," the sources said.

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