It’s happened again. Life Insurance Corporation has once again been called in by the government to do its dirty work; in this case, it’s been urged to help in the recapitalisation of public-sector banks.
However, the Insurance Regulatory Development Authority (IRDA) is frowning at LIC’s role of knight in shining armour because the financial institution has already crossed its equity investment limit in some state-run banks. “There is a cap for equity exposure. The limit has not been fixed for nothing…..” J Hari Narayan, IRDA chariman told Business Standard. LIC can only invest up to 10 percent of a company’s shares, according to the Insurance Act.
LIC has already invested close to Rs 8,000 crore in several public-sector banks, including Punjab National Bank, Dena Bank and Central Bank of India in the current quarter. In addition, it is planning to increase its stake in other banks like Syndicate Bank, according to media reports.
State-run banks are not the only beneficiaries of LIC’s generosity. Earlier this month, the government prodded LIC to buy as much as as 4.4 percent in state-run oil company ONGC for a whopping amount of Rs 11,450 crore. The government had put up 5 percent of ONGC for sale.
What will the government ask LIC to do next?