The government, which owns the IPO-bound insurance major Life Insurance Corporation (LIC), will not approach the market for the company's follow-on public offer (FPO) for a year, official sources told CNBC-TV18 on Monday.

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An FPO is a process in which a company already listed on the stock exchange issues new shares to the existing shareholders or to the market for new investors. An FPO is used by a company to diversify its equity base or pay off debt.

According to the rules, companies are not allowed to launch FPOs for six months after their IPOs.

Market regulator Securities and Exchange Board of India (SEBI) is considering an exemption sought by LIC on the mandatory 5 percent listing, said the sources, adding that amendments to the Securities Contracts (Regulation) Rules are not required.

Currently, if the firm's post-issue capital calculated at the offer price is above Rs 1 lakh crore, it is required to issue shares worth Rs 5,000 crore and five percent of equity. The government will need an exemption from SEBI in case of a lower offer.

The rule would mean a Rs 35,000 crore issue from LIC, for which, the market would not have enough appetite, added the sources, who did not want to be named.

Sources earlier told CNBC-TV18 that the government has proposed to trim the basic offer size of the LIC IPO to Rs 21,000 crore with a minimum 3.5 percent stake dilution, which was 5 percent earlier, as announced in the DRHP filed in February.

The sources added that LIC will most likely launch its IPO in the first week of May with the government having time till May 12.