LIC: What is happening in LIC that raised the issue in the opposition unity meeting

The government had brought the IPO of LIC last year. Its size was Rs 21,000 crore. Through this IPO, the government sold its 3.5 per cent stake in the company. Earlier, the government had planned to sell 5 per cent stake in LIC, but considering the ongoing volatility in the market, it sold only 3.5 per cent stake. This IPO received a total of 2.95 times bids. Many people had opened demat account for the first time to buy LIC shares. But this stock did not live up to the expectations of the investors.

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savior of government

The journey of this more than 60 years old government insurance company has been spectacular. It is the largest insurance company in the country. It has more than 70 per cent market share in the insurance market in India. It has been the savior of the government. Whenever the government gets into trouble, it is LIC that has been bailing it out. Due to this, LIC has also suffered a lot. In the year 2015, ONGC’s IPO was surpassed by LIC itself. IDBI Bank’s boat struggling with debt was also crossed by LIC. But now LIC itself is on the verge of being sold. The government wants to gradually reduce its stake in it.

Finance Minister Nirmala Sitharaman, while proposing the sale of stake in LIC, had said that the listing of a company on the stock market brings discipline to the company and gives it access to the financial markets. Opportunities open up for the company and retail investors also get an opportunity to earn. In recent times LIC is getting tough competition from private companies but still the market share of other companies is nowhere in comparison to it.

LIC gave a shock as the year went by, buying a house became expensive

Increase in NPA

LIC is the largest institutional investor in the country and has stake in many companies. LIC’s NPA has increased in recent years. This is because many of the companies in which he had invested are in bad shape. Many of these are going through bankruptcy proceedings. These include Dewan Housing, Anil Ambani’s Reliance Capital, Indiabulls Housing Finance, Piramal Capital and Yes Bank. When the government started selling government companies in 2009, LIC was at the forefront of buying. From 2009 to 2012, the government earned $9 billion from disinvestment, of which LIC had a third.

A group of LIC employees opposed the central government’s decision to bring the IPO. They argue that this will affect the image of the company. The trust of policyholders and agents is the biggest factor in the progress of LIC. If the government sells stake in it, it will shake the confidence of the policyholders. Parliament had made a separate law for the functioning of LIC. In its section 37, there was a guarantee of the central government regarding the amount of LIC insurance and bonus. This was not the case with private sector insurance companies. Perhaps this is the reason why the country had faith in LIC.