The Insurance Regulatory and Development Authority (IRDA) is considering relaxing the 10% ceiling on equity investment by insurers in a company.
This move will not only attract long-term investments into the equity markets but it will also give greater investment flexibility to Life Insurance Corporation of India, India’s largest institutional investor.
In 2008, the insurance regulator amended investment norm that prohibit an insurer from having more than 10% stake in a company. In April 2012, LIC had come under the scanner of IRDA for exceeding investment limit in 78 companies of which only 27 were listed. Some companies where LIC has exposure in excess of 10% include L&T, ITC, JSW Steel, MTNL and Wockhardt. IRDA had said it would not force LIC to reduce its stake immediately nor would it set a time frame for the exercise.
Government had sought a special dispensation for LIC since Life Insurance Corporation Act of 1956, allows LIC to acquire up to 30% equity in companies after government approval. Government also said that LIC which has huge investable corpus, the limit should be relaxed.
In FY13, LIC is planning to invest 15% of its corpus or around Rs. 45,000 crore in equities. In FY’12 LIC had invested about Rs. 49,960 crore in equities.
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http://www.indiainfoline.com/Markets/News/IRDA-to-relax-equity-investment-rules-for-insurers/5467557634
