Irda seeks LIC roadmap to cut holdings in top blue chip firms

Mumbai: The insurance regulator has sought a roadmap from the state-run Life Insurance Corporation of India ( LIC) on how it intends to bring down holdings in some companies which are above the industry norm of 15%, though it has not set any time -frame for the insurer to respond.

“We have asked the LIC to give a roadmap for reducing stake in companies where they own more than 15%,“ said an official from the Insurance Regulatory and Development Authority of India (Irda), who did not want to be identified. “We are yet to hear from LIC on the mat ter.“ LIC being a state-run company and because of its more than 60year legacy , has special privileges when it comes to investment cap in companies which came up in recent years.

Also, the insurer has been a piggy-bank for the government in the past whenever it was not able to invest in equity of the state-run companies, mainly banks. Hence, it was exempted from the investment rules that are applicable to other companies.

LIC did not respond to an e-mail on the issue.

“This is the second time we have written to the LIC asking them for a roadmap on bringing down its stake,“ said the official.

The state-run insurer owns more than 15% in cigarette maker ITC, engineering company Larsen & Toubro, and the state run Corporation Bank. The regulator in 2013 prescribed a 10% cap on equity ownership in a company by an insurer to ensure that the risks are limited. But above a certain size, insurers can in a staggered manner raise their holding in a company to 12%, and then to 15% as their fund size grows.