Govt to notify 30% investment ceiling norm for LIC soon
It is in the process and the notification will be issued soon, a Finance Ministry official said here.
It is already given in the LIC Act 1959 that the LIC can invest up to 30 per cent of its total fund in a single entity, the official said.
However, 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, meanwhile, has already clarified that LIC Act 1959 supersedes Insurance Act 1999.
The draft notification about the investment ceiling was issued a couple of months ago.
The government has proposed to raise about Rs 30,000 crore from disinvestment during the current fiscal. Last month, the government successfully divested 10 per cent stake in iron ore major NMDC, raising about Rs 6,000 crore.
So far, the government has realised Rs 6,900 crore from disinvestment in various companies.
In any case, LIC won't be able to pick up more than 25 per cent stake in a company, as Sebi's prescribed Take Over code kicks in at that level, making it mandatory for the acquirer to make open offer for another 26 per cent stake.
As of today, LIC has stake over 10 per cent in many companies including L&T and Corporation Bank.
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