Govt decks up for sell-offs, ups LICís exposure limit
With the norms being eased, the cash-rich insurer can now pick up large chunks of PSU shares expected to be put on offer in the coming months. While it has been targeting Rs 30,000 crore from disinvestments in 2011-12, the government has mopped up virtually nothing so far.
The insurance regulator has strongly opposed the ministryís idea, saying it would not be prudent and pointing out that large exposures to individual companies could pose risks to LIC. The Insurance Regulatory and Development Authority (Irda) has also been concerned over any likely negative impact on LICís financials from its heavy annuity payouts.
As per the Irda Act, 1999, insurance companies can hold only up to 10 per cent stake in a company. The government can go ahead with its plan to raise the upper limit for LIC investment in companies as Section 18 of Irda Act 1999 states that in matters of policy, its views would prevail over the regulatorís. The relevant notification is being issued under Section 43(2) of the Insurance Act of 1938. FE
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