# LIC share sale revives zero-fee advisor debate, banks earn Rs 4 lakh 2026-08-24T10:04:10+00:00 | Business & Economy | Indian Opinion Desk Corroboration: 1 independent outlet Life Insurance Corp. of India's Rs 31,500 crore share sale, the largest-ever secondary offering in India, will earn the four managing investment banks a combined fee of just Rs 4 lakh, reigniting the debate over aggressive undercutting for marquee mandates. The banks, IIFL Capital Services, BNP Paribas Securities, Goldman Sachs (India) Securities and Motilal Oswal Investment Advisors, effectively received 0.0001% of the deal value. Executives at the participating banks defended the pricing as a strategic investment to boost league table rankings and win future mandates, with one saying the trade-off made sense from a reputation perspective. However, rivals criticised the practice, noting that a fee of roughly Rs 1 lakh per bank does not cover basic legal or compliance costs for a $3.3 billion transaction. State-backed investment banks also stayed away from the mandate due to the abnormally low fee. The LIC issue follows a pattern seen in other large public sector deals. In 2025, six banks managing State Bank of India's Rs 25,000 crore QIP charged just Re 1, and Coal India's 2010 IPO saw bankers quoting Re 1 for every Rs 1 crore raised. Participating banks maintain that managing India's largest insurer provides access to sovereign wealth funds and global investors, yielding downstream benefits. ## Indian Opinion Analysis The zero-fee practice underscores a structural tension in India's investment banking market: prestige deals like LIC's OFS are loss leaders that smaller, independent advisors cannot afford to take on, potentially consolidating the market among a handful of bulge-bracket firms. For the government as seller, the near-zero fee means lower transaction costs, but it raises questions about the quality of due diligence and execution when banks are effectively paying to participate. The Securities and Exchange Board of India has not publicly commented on the practice, but regulators globally have flagged conflicts of interest when advisory fees are decoupled from deal value. The next major test will be any forthcoming PSU divestment, such as a stake sale in IDBI Bank or a follow-on offer in a large state-run firm, where the bidding process for advisors will reveal if undercutting has become the new normal. ## Coverage - livemint.com Reports facts and quotes from both participating and rival bankers without taking sides, presented as a business story. This story was synthesised by AI from the source linked above. Tags: BNP Paribas, Goldman Sachs, IIFL Capital Services, LIC, Motilal Oswal, SEBI Canonical: https://indianopinion.org/lic-share-sale-revives-zero-fee-advisor-debate-banks-earn-rs-4-lakh/ License: Summary and commentary (c) Indian Opinion, reusable with attribution. Facts belong to the linked sources. Cite: https://indianopinion.org/lic-share-sale-revives-zero-fee-advisor-debate-banks-earn-rs-4-lakh/#story-in-brief Review state: restored archive article, accurate at time of publication, not offered to search indexes. How this brief was made: an AI model read the report linked above and wrote this summary and analysis, which were published automatically. Published briefs are sampled every hour by an automated quality check; the editor verifies its findings and approves corrections, and corrected briefs carry a dated correction line. We do no original reporting. Methodology: https://indianopinion.org/ai-use-policy/