Union Government allows 20 percent FDI in LIC

New Delhi, 26/2: The Union Cabinet has approved foreign direct investment in Life Insurance Corporation of India (LIC), government sources. FDI up to 20 percent will now be allowed in LIC under the automatic route.


In view of LIC IPO, it was believed that this proposal can be approved in today’s meeting. According to the current FDI policy, 74 percent foreign investment is allowed in the insurance sector. However, this rule does not apply to Life Insurance Corporation of India (LIC). Its management is under a separate law LIC Act.


IPO mandatory as per SEBI norms

As per the norms of market regulator SEBI, both FPI (Foreign Portfolio Investment) and FDI are allowed under the IPO offering. Since there is no provision for foreign investment in the LIC Act, there is a need to make the proposed LIC IPO as per SEBI norms with regard to foreign investor participation. Therefore, it was necessary to allow LIC foreign investment.

The cabinet had approved the IPO of LI in July last year. LIC has applied for this IPO before the market regulator SEBI. LIC’s IPO will probably come in March.


Investors taking interest in LIC IPO

Amidst the pressure in the stock market after the Ukraine crisis, the Finance Minister has dismissed the speculations of postponement of LIC IPO, saying that the IPO is in discussion in the market. Investors are also showing great interest in this. That is why the government is moving ahead with this issue. LIC’s IPO is going to be the biggest IPO of the country so far.

Comments are closed.