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

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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 stabilityIRDA approved LIC’s idea to invest in PSB’s
  • 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