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, the LIC Act has to be changed keeping in view the rules of the CBI.
The government wants to allow foreign direct investment (FDI) in LIC. The cabinet meeting today may decide on the proposal. For this, the government has to change the FDI policy. LIC is set to launch an IPO next month. The government wants to sell 5 percent shares of the country’s largest company.
After all, why is there a need to change FDI policy, what is its relation to LIC’s IPO, what are the current rules for foreign investment in LIC? Let’s not know the answers to these questions.
What is LIC law?
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.
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What are the rules of SEBI?
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, the LIC Act has to be changed keeping in view the rules of the CBI. Only then will the way be opened for foreign investment in the IPO.
The IPO was approved last year
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.
The largest IPO in the country
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.