Government to soon allow LIC to invest up to 30 per cent in shares
03 Jan 2013
The government is expected to soon come out with a notification allowing the Life Insurance Corporation of India (LIC) to invest up to 30 per cent of its funds in shares of listed as well as non-listed companies.
The state-run insurer is at present allowed to invest a maximum of 10 per cent of investible funds in shares.
The move should be seen in the backdrop of the government's divestment plan, which has targeted Rs30,000 in share sales of public sector companies in the current financial year.
The government, last month, divested 10 per cent stake in iron ore major NMDC for about Rs6,000 crore. It has so far raised Rs6,900 crore through disinvestments this year.
Reports quoting official sources, meanwhile, said LIC can invest up to 30 per cent of its total fund in a single entity under the LIC Act 1959.
However, with SEBI setting a 25 per cent trigger for open offer, LIC won't be able to pick up more than 25 per cent stake in a company.
The Insurance Act stipulates that an insurance company can invest only 10 per cent of the fund or have 10 per cent of a company's stake, whichever is lower, in an entity.
The law ministry, however, has clarified that LIC Act 1959 supersedes Insurance Act 1999.
