NEW DELHI: The union cabinet on Saturday approved 20% Foreign Direct Investment in Life Insurance Corporation of India. Though the government did not make a formal announcement, sources said the cabinet has allowed up to 20 per cent FDI under the direct route in the government-owned corporation.
Government sources say that insurance is a permitted sector under FDI policy. But, this policy currently lists only insurance company and intermediaries or insurance intermediaries under the Insurance sector. LIC being a statutory corporation, it is not covered under either insurance company or intermediaries or insurance intermediaries.
Further, no limit is prescribed for foreign investment in LIC under the LIC Act; the Insurance Act, 1938; the Insurance Regulatory and Development Authority Act, 1999 or regulations made under the respective Acts. The cabinet’s approval to amendment in FDI rules in LIC irons out these ambiguities. The government has given a go-ahead to divest 5% stake in LIC through listing of the insurer’s share on stock exchanges. The listing is likely to happen next month. The amendment in FDI policy would allow foreign investors to participate in the LIC’s share sale offer, which is likely to be the biggest in the country.