LIC Must Pare ITC, L&T Stakes To Below 15% By December 2018: IRDAI
The insurance regulator Irdai has reiterated that insurance behemoth Life Insurance Corporation (LIC) has to bring down its stakes in ITC and L&T to below 15 per cent by December 2018.
These two are considered as non-strategic investments for LIC. While LIC holds 16.29 per cent stake in ITC, it holds 17.97 per cent stake in L&T as of end June. However, LIC is free to continue with its strategic investments in companies like Corporation Bank (18.9 per cent), LIC Housing Finance (40.3 per cent) and Simplex Realty (22.9 per cent).
LIC has been holding these two companies on behalf of government since UTI was broken up in the early years of the new millennium through Suuti or Specified Undertaking of Unit Trust of India, along with stakes in Axis Bank. Suuti, which is managed by an administrator appointed by the Centre, lowered its stake in ITC from 11.12 per cent to 9.10 per cent in February, with LIC picking up the stake for around Rs 6,700 crore via block deals.
"Since LIC has been buying out the Suuti disinvestments in these two scrips and the government would have got the money, we have allowed LIC to reduce its stake in L&T and ITC to 15 per cent by December 2018," Nilesh Sathe, member (life, finance & investment), Irdai said here on the sidelines of an industry event organised by CII.
"LIC can continue its strategic investment in other companies beyond 15 per cent as usual, particularly in Corporation Bank and LIC HF," he added.
He further said "we don't want LIC diluting its investment in any company to create market disruption and so we are willing to consider case-to-case request from LIC to extend the timeline to bring its stake down to 15 per cent." Sathe also said the Irdai will be coming out with broking regulation shortly, and a final decision is likely on the next board meeting scheduled for August 28.
The regulator has already issued a discussion paper on the issue which seeks to double capital requirement for different categories of brokers including direct, composite and reinsurance.
(PTI)
