The Cabinet has approved amendment to permit for FDI in the Life Insurance Corporation of India (LIC) and further simplified and enhanced the existing FDI policy, CNBC-TV18 learnt from government sources on Saturday. The move will facilitate foreign funds to participate in the upcoming IPO of the state-owned insurance behemoth.
As per the current FDI policy issued by the Department for Promotion of Industry and Internal Trade (DPIIT), foreign investment is allowed in “insurance companies” and “intermediaries or Insurance Intermediary”. Since LIC is neither a company nor an intermediary, it is not covered by either. Further, no provision of FDI under either the LIC Act, 1956 or the Insurance Act, 1938 or the regulations has been made. Even the Insurance Regulatory and Development Authority Act, 1999 doesn’t have such provisions.
So, a special provision may be incorporated in the Consolidated FDI Policy for FDI in LIC, sources added. Since the FDI ceiling for public sector banks is 20 per cent under the approval route, a similar limit has been kept for FDI in LIC. However, the government has decided to keep FDI in LIC under the automatic route so that capital raising process may be expedited.