IRDA to give LIC time to reduce stake to 10% in cos

IRDA to give LIC time to reduce stake to 10% in cos


New Delhi: Insurance regulator IRDA today said it will give “reasonable time" to Life Insurance Corp to bring down its stake in various companies to 10%.

“We do not want forced sale by LIC so that it gets lower returns. We want to give reasonable time so that transition is smooth," IRDA member R Kannan told reporters here.

The regulator is in correspondence with the LIC and IRDA will definitely give due consideration, he said.

The statement assumes significance in the wake of the investment guidelines issued by the Insurance Regulatory and Development Authority (IRDA) last month that prohibits an insurer from investing more than 10% in a company.

Prominent companies in which LIC holds over 10% include Corporation Bank, Cipla, M&M, Maruti Suzuki, MTNL, Tata Motors, HPCL, Ranbaxy Labs, Oriental Bank, Dr Reddy’s Labs, Tata Steel and Reliance Infra.

The insurer has invested more than Rs1.3 lakh crore in equities of different private and public sector companies.

On risk-based capital, he said the roadmap would evolve by March 2009.

When the world is moving towards Solvency II there is need for the Indian insurance sector to adopt to new capital risk norms, he said.

The solvancy margin prescribed today are very adequate, he said, adding Indian insurers have no external investments so there is no cause of worry.