LIC will have to prune stake in ITC & L&T to 15%

Life Insurance Corporation of India will have to prune its stake in two companies - ITC and L&T - to 15 per cent in two years, said a senior Irda official.

The insurer recently raised its stake in cigarette maker ITC by 2 per cent to 16.3 per cent, and has also sought the Insurance Regulatory Development and Authority (Irda's) permission to increase its stake in India's biggest engineering company Larsen & Toubro by another 5 per cent to 20.7 per cent.

"Since LIC was buying out SUUTI's stake in these two scrips, the government would have got the money," said Irda member, life, Nilesh Sathe. "We have given two years' time to LIC to bring down its stake and hope they are able to do so.

We do not want disruptions in the market while they reduce their stake. If they need more time, we are ready to consider that," he said.

Earlier this year, Irda had asked India's biggest life insurance company for a roadmap on reducing its equity exposure in listed entities.

LIC can continue its strategic investment in other companies beyond 15 per cent as usual, said Sathe.

He added that the insurance regulator does not want any disruption in the market due to LIC's decision to sell stake, and that it is even willing to give the insurance company more time to prune its stake to 15 per cent on a case-to-case basis.