LIC Keen To Invest In Low-risk Projects

Mumbai, Sept 17: | Updated: Sep 18 2003, 05:30am hrs
LIC chairman SB Mathur has said that the corporation is keen to deploy funds at a competitive rate than the market rates, provided a risk profile of the projects suits the organisation.

We are keen to invest large amounts at a cheaper rate in big projects which are less risky, he noted.

Speaking to FE he said that in case of a higher risk, LIC will charge a higher rate than the market rate offered by banks and financial institutions.

Though LIC needs to invest in instruments approved by the Insurance Regulatory and Development Authority (Irda) including AAA and AA, it can still invest up to 15 per cent in sound unapproved instruments, he said.

In another development LIC with an investible fund of Rs 70,000 crore in 2003-04 has tied-up with SBI Caps for a strategic alliance for utilising the latters expertise on the range of investment.

The key areas covered by the alliance are project advisory, structured finance, private placement of fixed income securities, public issues, broking services, sales and distribution and exchange of economic and securities research.

With the days of consortium lending over, the alliance with SBI Caps will help us take large investment decisions including infrastructural projects, he said adding that LIC has to mandatorily invest 15 per cent of its investible fund in the infrastructural projects but could manage to deploy only 13 per cent in the absence of good projects. Mr Mathur expected that new airport projects and road projects will provide the right kind of investment avenues to LIC.

LIC is now making arrangements with Corporation Bank to launch its proposed cheaper credit card. It will be a three way tie-up among LIC, Corporation Bank and international credit card institutions. Since Corporation Bank already has basic infrastructure like branches and ATM network we would like to make use of them, he explained.

Mr DP Roy, executive chairman, SBI Caps commented that his organisation will help LIC to opt for take out financing in future. The banks cannot lend for more than seven to eight years in any long term projects and LIC can take over the financing from the banks after this period, he said.