New Delhi. In the funds, the federal government introduced a stake sale in LIC. The authorities will deliver an IPO of the nation's largest insurance coverage firm for this. For this, the federal government may also make modifications within the Life Insurance Corporation Act. But now a information associated to LIC has come. Government will put cash in LIC earlier than IPO. Government goes to infuse Rs 100 crore in LIC. The authorities plans to launch LIC's IPO within the second half of the subsequent monetary 12 months. After the IPO, LIC shall be listed on the inventory trade. LIC might want to full plenty of procedures to get it listed, together with amendments to the LIC Act. <! –
But earlier than the IPO, LIC will get Rs 100 crore from the federal government. LIC is financially sound. LIC's earnings and earnings have elevated considerably regardless of growing NPAs. Let us know what’s the motive why LIC wanted authorities assist.
– LIC's NPA being uncontrollable, together with Anil Ambani Group, many are accountable
This is the explanation for the federal government's transfer
In truth, Equity Capital of LIC is price Rs 100 crore, which is simply too low for an IPO. While the financially robust LIC has a complete worth of about Rs 10 lakh crore. In such a scenario, if the federal government additionally sells 10 per cent stake by way of LIC's IPO, then its fairness capital should be elevated. For this motive, the federal government should make investments Rs 100 crore in LIC. According to an LIC official, LIC pays 95% of its surplus to the purchasers and the remaining to the federal government.
Where will the cash come from
According to an official, the extra capital required for the IPO will seemingly come from the federal government's surplus portion because the policyholders' cash won’t be touched. LIC's surplus stood at Rs 53,214.41 crore in FY 2018-19. Of this, the federal government was given a dividend of Rs 2611 crore. In 2017-18, LIC generated a surplus of Rs 48,444 crore, out of which Rs 2430 crore was given to the federal government as dividend. Its internet premium revenue was Rs 3.37 lakh crore in FY 2018-19, whereas internet revenue from investments stood at Rs 2.22 lakh crore.
How a lot is the market share
As of November 2019, LIC has a market share of 76.28 per cent when it comes to coverage promoting. LIC has a market share of 71 per cent within the first 12 months premium. LIC's fairness funding stood at Rs 28.32 lakh crore in FY 2018-19, which is 94.9 per cent of its whole funding. LIC invested Rs 1.17 lakh crore in debt market, whereas LIC has a capital of Rs 34,849.37 crore in cash market.