State-owned Life Insurance Corporation may be roped in to participate in the Rs. 2.11 lakh crore recapitalisation initiatives for public sector banks (PSBs).As part of the programme, LIC could also increase its stake in various PSBs which are required to raise Rs. 58,000 crore from the capital market, sources said. Besides, they said, LIC could participate in a non operating holding company (NOHC) structure to which the government may transfer its share in various PSHs.
LIC in the past has pumped capital in PSBs through preference share allotment and Qualified Institutional Placement (QIP). Earlier this year, Bank of India issued preference share to LIC worth Rs. 451 crore. Similarly, UCO Bank, IDBI Bank, United Bank of India, Dena Bank and Indian Overseas Bank also issued preference shares to LIC in the past few years as part of their effort to shore up their capital.
Sources said that if there is LIC participation in the government recapitalisation initiative, it would be as per the regulatory investment ceiling fixed by the Insurance and Regulatory Development Authority of India (Irda).
