New Delhi: The government is planning to constitute an inter-ministerial committee to look at the listing of insurance behemoth Life Insurance Corporation (LIC) while stake dilution is unlikely to be more than 10 per cent. Finance minister Nirmala Sitharaman while presenting Union Budget 2020-21 on Saturday (February 1) proposed to dilute a part of government’s stake in LIC through an initial public offer (IPO) next fiscal. She had said LIC will be listed as part of the government disinvestment initiative.
Finance Secretary Rajiv Kumar has mentioned that an inter-ministerial procedure of department of financial services, Department of Investment and Public Asset Management (DIPAM) and the law will work on the various parameters of the IPO.
The finance secretary was reticent on the quantum of dilution, but a government official stated it is unlikely to be more than 10 per cent. The IPO is likely in the second half of the next financial year (FY21).
The Centre aims to garner Rs 90,000 crore from the listing of LIC and stake sale in IDBI Bank in the next fiscal out of total disinvestment target of Rs 2.10 lakh crore. At present, the government owns 100 per cent stake in LIC, while it holds approximately 46.5 per cent in IDBI Bank.
Allaying policyholders’ worries, Kumar said LIC policies would not lose their sovereign guarantee. He also added that first LIC has to be assessed and several processes, including legislative changes, have to be followed. The listing of LIC is a significant step to bring transparency and enhance disclosures by the entity.
Meanwhile, it was reported that LIC unions had decided to stage a series of protests against the government’s proposal to sell a part of its holding in the life insurer through IPO.