New Delhi, February 26
The Union Cabinet today approved a policy amendment allowing foreign direct investment (FDI) of up to 20 per cent in Life Insurance Corporation (LIC) ahead of its next month’s sale of 5 per cent stake estimated to raise about Rs 60,000 crore.
Policy amendment
- The LIC is governed by a special Act and present rules do not allow foreign investment in the insurance behemoth
- The latest policy amendment will allow foreign direct investors to buy up to 20% LIC shares through the automatic route
- Up to 74% FDI is already allowed in private insurance companies and 20% in public sector banks
The amendment, aimed at easing LIC’s listing, would allow foreign direct investors to buy up to 20 per cent of its shares through the automatic route. Present rules do not allow foreign investment in the LIC although 74 per cent FDI is allowed in private insurance companies. This is because the LIC is governed by a special Act. FDI up to 20 per cent is also allowed in public sector banks.
Setting the stage for the country’s biggest-ever public offering, the LIC, on February 13, filed draft papers with SEBI for the sale of 5 per cent stake by the government.
The LIC will offer some part of the IPO to policyholders and employees at a discount over the floor price.
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