The FDI limit in state-owned banks is 20 per cent. Therefore, the limit of 20 percent has been set for LIC. Sources said that foreign investors may show good interest in LIC’s IPO with the permission of FDI.
The way has been opened for FDI in LIC. The Union Cabinet has given its approval. The proposal was approved at a cabinet meeting on Saturday. Official sources gave this information to CNCB-TV18. Moneycontrol.com reported on Saturday morning that the cabinet could approve the proposal to do FDI in LIC.
Sources said that up to 20 per cent foreign direct investment (FDI) will now be allowed in LIC on the automated route. The existing policy of FDI has also been changed. If FDI is approved, foreign funds will be able to invest in the IPO of the country’s largest insurance company.
According to the current FDI policy, 74% foreign investment from Russia is allowed in the insurance sector. However, this rule does not apply to LIC. This is because the government has a separate law for LIC, which is called LIC law. Now the government has approved the proposal to change it.
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As per SEBI rules, foreign portfolio investment (FPI) and foreign direct investment are allowed under public offer. However, since there is no provision for foreign investment in the LIC Act, foreign funds cannot invest in its IPO. Following the cabinet’s change in FDI policy, foreign funds will now be able to invest in LIC’s IPO.
The FDI limit in state-owned banks is 20 per cent. Therefore, the limit of 20 percent has been set for LIC. Sources said that foreign investors may show good interest in LIC’s IPO with the permission of FDI.
In July last year, the cabinet approved LIC’s IPO proposal. Now the preparations for this IPO have been completed. The IPO is expected to hit the market in March. The government can raise Rs 60,000-90,000 crore from this issue.
LIC’s IPO will be the largest IPO in the country. After the listing, LIC will be added to the list of the largest companies in the country. Only two companies will be bigger than this – RIL and TCS.
LIC has decided to reserve shares for its policyholders in the IPO. The company can reserve about 10 percent of the shares for policyholders. Companies can also discount their share price. LIC has about 29 crore policyholders. It has about 12 lakh agents across the country.
