The IPO of India's biggest insurer, Life Insurance Corporation (LIC), has got off to a good start, with the $732 million of shares reserved for so-called anchor investors oversubscribed at the upper end of the price range, a banking source said.

The Indian government has said it expects to raise up to $2.74 billion, just a third of its original target, from selling a 3.5% stake in LIC in the country's biggest initial public offering (IPO).

Anchor investors are high-profile institutional investors that are allotted shares before the subscription opens for retail and other investors, and have to commit to holding their shares for a certain period after listing.

LIC's offering is set to open for other investors on May 4 and will close on May 9. The indicative price range has been set at 902 to 949 rupees per share, with 56 billion rupees ($732 million) of shares set aside for anchor investors.

Norwegian wealth fund Norges Bank Investment Management and Singapore sovereign wealth fund GIC have subscribed to the anchor book, the source said.

Alongside other global funds, domestic mutual fund houses such as HDFC mutual fund, SBI, ICICI and Kotak have also come in as anchor investors, the source added.

Abu Dhabi Investment Authority and Qatar investment authority had previously been in talks to be anchor investors, but it wasn't immediately clear if they made bids.

India's finance ministry did not immediately respond to an email seeking comment.

Over 20 investors had expressed interest in subscribing to the anchor book, two other banking sources said.

Foreign institutional investors had some concerns about LIC's IPO, but global pension funds had shown "good interest," LIC's chairman said last week.

($1 = 76.5150 Indian rupees)

($1 = 76.4640 Indian rupees)

(Reporting by Nupur Anand; Editing by Sanjeev Miglani and Mark Potter)