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India aims to appoint a private sector professional as the first chief executive of the Life Insurance Corporation of India in an effort to modernise its largest insurer after a disappointing stock market debut, two government officials said.

A private sector appointee to lead India's largest insurer, which manages 41 trillion rupees ($500.69 billion) in assets, would be a first in its 66-year history.

"The government is planning to broaden the eligibility criteria for appointment of LIC CEO so that private sector candidates can apply," said one of the government officials, who declined to be identified as the discussions are private.

The Ministry of Finance, which oversees the LIC, did not respond to emailed questions.

The insurer is now headed by a chairman but that post will be scrapped when the term of the present incumbent ends in March, the officials said.

After that, the government will appoint a chief executive from the private sector, they said. Changes to the law that governs the LIC were made last year to enable this.

"The move will lead to more choices and send good signals to shareholders," said the other government official, who also declined to be identified.

The officials did not specify which sphere the appointee might come from.

The insurer's share price has taken a beating since its listing in May last year and trades 30% lower than the price at which the shares were issued, wiping off nearly 2 trillion rupees ($24.31 billion) in investor wealth.

A former finance secretary, Subhash Chandra Garg, said he agreed with the idea that the pool of professionals eligible to lead the insurer be widened beyond sister, state-run firms.

"There is absolutely no harm, this a perfectly sensible move," Garg said.

While a decision on appointing from the private sector had been made in principle, the government was considering whether further changes to the law were required and if the government could offer pay in line with the private sector, the first official said.

Private firms generally pay more than the public sector.

The government has in the past made appointments from the private sector to other state-run entities such as banks.