IRDA approved LIC’s idea to invest in PSB’s

The regulatory authority of Insurance sector has given its nod to the Biggest life insurance company of India- LIC to invest in the Public Sector Banks.

Flash points

• IRDA after complete scrutiny of the investments of LIC in PSU’s have agreed to the proposal of increasing its investments in Public sector banks
• RBI had expressed concern over LIC making huge investments in PSU banks, saying it can affect the financial stability
• But VR Iyer, Member, IRDA, led the team which held discussions with LIC and also found LIC’s equity investment is just 6-7 per cent and investments in banks are still a smaller portion

Points to note

• LIC had made a profit of Rs 24,373 crore from the equity market in 2014-15 as against a profit of Rs 21,257 crore in the financial year 2014
• LIC’s aggregate shareholding in PSU banks declined to 01 per cent. It saw a sharp decline in the market value of its holding in these banks.
• The market value of LIC holdings in the 23 banks declined 30 per cent from Rs 38,373 crore in December 2015 to Rs 26,837 crore
• The RBI had red flagged its concerns after the LIC increased its stake in several PSU banks last year
• But LIC told that all its investments are long term and hence there will not be huge loss

Shares of LIC in various banks

• LIC hiked its stake in United Bank – 1 per cent to 12.12 per cent
• Punjab & Sind Bank f-21 per cent to 10.49 per cent
• Central Bank – 44 per cent to 13.41 per cent
• Bank of Maharashtra – 31 per cent to 11.24 per cent
• Canara Bank – 5.35 per cent to 14.4 per cent and Bank of India –82 per cent to 14.93 per cent

Points to note

• LIC chairman– S.K.Roy
• LIC headquarters-Mumbai
• IRDA chairman- S.Vijayan
• IRDA headquarters- Hyderabad