BackLIC buys over Rs1.5 trillion in govt bonds in fiscal 2016
Life Insurance Corporation has already booked profit worth Rs10,000 crore so far this fiscal, says chairman S.K. Roy
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Mumbai: State-run Life Insurance Corp. (LIC), the country’s biggest institutional investor, has bought over ₹ 1.5 trillion in government bonds so far this fiscal and has reached the cap, apart from being a net buyer in the equities, chairman S.K. Roy said on Monday.
Roy was answering a question from PTI on why LIC has of late been going slow in the government bond market.
“The problem is that there is a cap on our investments, which in the case of the government debt is 50% of our total incremental investment. And we have already reached that level," Roy said.
He said LIC has been the net buyer of equities in the current fiscal and has already booked profit worth ₹ 10,000 crore so far this fiscal. The nation’s largest insurance company has so far invested over ₹ 53,000 crore into equities this fiscal, Roy told reporters after launching LIC’s digital initiative wherein a customer can buy, check and claim policy online.
Roy said LIC has pumped in more funds into government bonds this year than it invested in equities. When asked how much more incremental investment will LIC be undertaking, Roy said, “We have set no particular investment target for the year. We have been taking contrarian view on the stock market."
Defending his huge exposure to banks, especially in state-run banks some of whose stocks are trading even below book value, he said LIC is not in a bad position due to these investments as “we are in them for the long term. There are reports that it’s the right to accumulate banking stocks".
He said of late LIC has been increasing play on information technology, pharma and fast-moving consumer goods stocks. He did not divulge further details.
Roy said a slump in the stock markets is an opportunity for LIC to buy. When asked about investment into railways, Roy said LIC has already subscribed bonds worth ₹ 2,000 crore from the national transporter and hopes to subscribe another tranche this fiscal. But he did not say how much that would be.
LIC had entered into an agreement with the railways earlier this fiscal to fund ₹ 1.5 trillion over the next five years as part of part funding the ₹ 8.5 trillion investment in Asia’s oldest rail network as it seeks to upgrade its decades-old transport facility.
In fiscal 2015, LIC netted a 15% gain from its equity play at ₹ 24,373 crore, as the benchmark Sensex made 25% gains during 2014-15, its best show since 2010. LIC had made a profit of ₹ 21,257 crore from the equity markets in fiscal 2014, and ₹ 24,373 crore in fiscal 2015, which is a gain of 14.65%.
The returns come even as LIC invested ₹ 7,328 crore less in fiscal 2015 than what it had invested in the previous year. While LIC had invested ₹ 54,330 crore into the markets in fiscal 2014, its investments in fiscal 2015 were only ₹ 47,002 crore, S.K. Roy had told PTI recently. PTI
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