The Union Cabinet will possibly accept the plan to permit foreign direct investment (FDI) in Life Insurance Corporation of India (LIC) tomorrow, an action that will facilitate foreign funds to join in the forthcoming IPO of the state-owned insurance behemoth.
The decision is anticipated at the conference of the Union Cabinet and the Cabinet Committee on Economic Affairs (CCEA), which is slated for tomorrow, according to reports.
It is suggested that a special provision may be encompassed in the Consolidated FDI Policy for FDI in LIC, the sources explained. Since the FDI ceiling for public sector banks is 20 percent on the approval route, a related limit may be maintained for FDI in LIC. But the government may assume to keep FDI in LIC under the mechanical route so that the capital raising method may be accelerated, although the final ruling will be taken by the cabinet only.
As per the recent FDI policy issued by the Department for Promotion of Industry and Internal Trade (DPIIT), foreign investment is authorized in “insurance companies” and “intermediaries or Insurance intermediaries.” Since LIC is neither a firm nor an intermediary, it is not enclosed by either. Further, no provision of FDI under either the LIC Act, 1956 or the Insurance Act, 1938 or the restrictions has been made. Even the Insurance Regulatory and Development Authority Act, 1999 doesn’t have such conditions.
