Cabinet allows up to 20% FDI in IPO-bound LIC: Sources
The Hindu
The decision in this regard was taken by the Cabinet, chaired by Prime Minister Narendra Modi
The Union Cabinet on February 26 permitted up to 20% foreign direct investment (FDI) under automatic route in IPO-bound LIC with an aim to facilitate disinvestment of the country's largest insurer, sources said.
The decision in this regard was taken by the Cabinet, chaired by Prime Minister Narendra Modi. The government has approved listing of shares of LIC on the stock market through an IPO by part-sale of its stake in the insurer and raising fresh equity capital.
Foreign investors may be desirous of participating in the mega IPO. However, the existing FDI policy did not prescribe any specific provision for foreign investment in LIC, which is a statutory corporation established under the LIC Act, 1956.
Since as per the present FDI policy, the foreign inflows ceiling for public sector banks is 20% under government approval route, it has been decided to allow foreign investment of up to 20% for LIC and such other corporate bodies.
Further, in order to expedite the capital raising process, FDI has been kept under the automatic route, as in the case of the rest of the insurance sector, one of the sources said.
Increased FDI inflows will supplement domestic capital, technology transfer, skill development for accelerated economic growth and development across sectors.
Setting the stage for the country's biggest-ever public offering, Life Insurance Corporation on February 13 filed draft papers with capital market regulator Securities and Exchange Board of India (SEBI) for the sale of 5% stake by the government for an estimated ₹63,000 crore.