LIC chairman Vijayan asked to continue as MD as term ends

In a move that has raised eyebrows, T S Vijayan, chairman of the Life Insurance Corp whose five-year term ended on Tuesday, has been asked to continue in the LIC in the lesser position of managing director.

Meanwhile the government has appointed additional secretary in the department of financial services Rakesh Singh as acting chairman. Singh is already in charge of NABARD as well.

An NDTV report said sources have indicated that D K Mehrotra, currently one of the managing directors in LIC, is leading the race to take over as the next chairman, with his name being proposed to the prime minister's office for final approval.

Singh's appointment at LIC is again is a break from the practice adopted in recent years, when the most senior managing director was appointed officiating chairman of the country's biggest life insurer. The last time an outsider had taken charge at LIC was when banker T A Pai was appointed chairman in 1970.

The appointment of the LIC chairman is significant considering that the state-owned corporation manages Rs12 lakh crore of assets - 10 times the record overseas equity investments in 2010. The LIC is also viewed as a stabilising influence in the local equities market given its size.

But the allegations of corruption in the mortgage unit and deficit in some historical schemes have reportedly weighed against Vijayan, who has two more years to retire.

The corporation has three managing directors - DK Mehrotra, Thomas Mathew and A K Dasgupta. The government is carrying out a special audit on LIC's investments after the loans-for bribes scandal broke out last year.

"The process for selection of the next chairman of LIC has already started. This is not a demotion for Vijayan and we expect him to guide the country's largest insurer at his present position and then help the new appointee," a finance ministry official told The Economic Times.