|Chennai||Rs. 24470.00 (1.37%)|
|Mumbai||Rs. 24900.00 (0.97%)|
|Delhi||Rs. 24200.00 (1.26%)|
|Kolkata||Rs. 24160.00 (0%)|
|Kerala||Rs. 24000.00 (0.63%)|
|Bangalore||Rs. 23800.00 (0%)|
|Hyderabad||Rs. 24140.00 (1.17%)|
The government on Wednesday said the cap on stake that state-owned Life Insurance Corporation (LIC) can hold in companies would raised to 30 per cent from 10 per cent at present.
However, the new norm, to be issued through a notification soon, will be different for private insurers, which are allowed to invest up to 10 per cent in equity of companies.
This is in contrast with the views of the Insurance Regulatory and Development Authority (Irda), which was against LIC picking up more than 10 per cent equity in any company.
The move is seen as aimed at boosting the government’s efforts to raise Rs 30,000 crore through disinvestment this financial year.
“LIC can invest up to 30 per cent of a company’s paid-up capital. Earlier, it could invest up to 10 per cent,” Financial Services Secretary D K Mittal told reporters here.
The new norms would enable the cash-rich LIC, which invests Rs 50,000-60,000 crore in equity annually, to pick up higher equity in state-owned companies during the disinvestment process.
LIC MD Sushobhan Sarkar said on the sidelines of an insurance summit organised by Asia Insurance Post: “The government has clarified its position on up to 30 per cent equity investment. However, we have internal prudence norms and we exceed those only in a few companies.”
The LIC Act, 1956, says the insurer can hold up to 25 per cent stake in companies. However, in 2008, the amended Irda Act restricted the stake insurers could hold in other firms to 10 per cent. A notification issued under the Act superseded all notifications. This meant LIC also had to pare its stake in companies to 10 per cent.
LIC has more than 10 per cent stake in companies such as L&T, Tata Steel, Axis Bank, Punjab National Bank, Shipping Corporation of India and in unlisted firms like UTI AMC and IL&FS.
The move to allow LIC to own up to 30 per cent in listed companies may be aimed at easing the deadlock on the long-pending dissolution of SUUTI (Special Undertaking of UTI).
According to data provided by BS Research Bureau, SUUTI held more than one per cent stake in 19 firms. The holding is worth over a staggering Rs 45,000 crore, enough to meet this year’s disinvestment target.