LIC policyholders may get up to a 10% quota in the upcoming initial public offering (IPO). Anurag Thakur, Minister of State for Finance informed the Rajya Sabha through a written reply.
"In Finance Bill, 2021 - 2022, it has been proposed to have a reservation on a competitive basis, to the extent of up to ten per cent of the issue size, in favour of life insurance policyholders of LIC", says the reply.
Further, the reply states that the government will retain management control, safeguarding the interest of policy holders.
The Finance Bill is the legislative document released as part of the Budget, which needs to be approved by Parliament for the government to be able to impose taxes and raise funds. Once passed, the Finance Bill becomes the Finance Act for that year.
The statement was part of a written reply given to Ripun Bora, a Congress Rajya Sabha MP from Assam giving more details about the IPO and how the government plans to safeguard policyholders.
This year, in the budget, Finance Minister Nirmala Sitharaman reiterated that government would be bringing in the IPO for LIC in the next financial year. "In 2021-22 we would also bring the IPO of LIC for which I am bringing the requisite amendments in this Session itself", she said.
The announcement for the IPO comes as part of a larger privatisation plan, which includes the government's intention to divest stakes in two public-sector banks and one general insurance company to shore up revenue from disinvestment, though the government has not yet revealed their names.
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In last year's budget too, she said that the government was working towards an IPO for LIC.
The size of the IPO though still remains unknown, though some analysts after the first announcement by the government put the valuation anywhere between ₹9.9 lakh crores to ₹11.5 lakh crores. If these numbers are true, then it would put the company in the big league of listed Indian corporates. Reliance Industries and Tata Consultancy Services are among the companies that have market capitalisations above ₹10 lakh crores.
LIC is India's largest life insurance provider with more than a 65% market share, whose policies are backed by a sovereign guarantee by the Government of India.
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