PremiumNEW DELHI: The finance ministry has circulated a cabinet note to seek inter-ministerial views on the various amendments in the Life Insurance Corp. (LIC) Act, 1956, in line with its plan for the mega initial share sale of the state-owned life insurer.
“There is a proposal to amend six sections in the LIC Act, which includes changes related to the capital structure, board of directors, among others. Cabinet approval is expected in a month and after this the changes will be introduced in the Parliament for its approval," a senior government told Mint.
The cabinet approval will enable dilution of the government shareholding by 25%, but in tranches, in line with government regulations, the official said. The government owns 100% in the country’s largest insurer. Earlier this year, Mint reported the quantum of stake in LIC it is unlikely to be over 10% in one ago as the market may not be able to absorb it.
Another government official said that process of listing LIC on domestic bourses will take more than a year as the process may involve amendment in several laws, looking at the Securities and Exchange Board of India (SEBI) regulations and significant time will be spent finding out the valuation. “The outbreak of covid-19 has only delayed the process further and a lot will depend on the market conditions," the official said.
An inter-ministerial committee was set up in February, comprising officials from the department of investment and public asset management (DIPAM), department of financial services and law ministry to oversee the stake sale in LIC.
The government’s plan to sell a part of its stake in LIC is a part its massive ₹2.1 trillion disinvestment target that was announced in the Budget for 2020-21. Out of the total target, the finance ministry had said it hoped to get ₹90,000 crore from LIC and IDBI Bank stake sales. According to internal estimates, the government aims to garner ₹20,000 crore from IDBI Bank stake sale. As on 17 September, the government has raised ₹4.99 trillion through its disinvestment process.
