The Life Insurance Corporation of India (LIC) intends to transfer nearly $22 billion from funds held by policyholders into a fund designated for dividend payments.
In May, the state-owned insurer went public on Indian stock exchanges, but since then, the price of its stock has fallen by more than 35%.
LIC is currently considering steps to boost its share price.
The company plans to transfer $21.83 billion, or 1.8 trillion Indian rupees, from its non-participating fund to its shareholders' fund.
There are two main types of products sold by life insurance companies one is "participation policies," which share earnings with consumers.
Second is non-participating policies that have fixed return.
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