LIC likely to get additional time to pare down stake in firms to 15%

Life Insurance Corporation of India (LIC) is likely to get additional time to pare down its stake in companies where it has more than 15 percent stake. Sources close to the development said that they may get an extension beyond the December 2018 deadline set by Insurance Regulatory and Development Authority of India (IRDAI).

"Additional time has been sought and if required it will be given," said a senior official. LIC has exceeded 15 percent stake in companies like ITC, Corporation Bank and L&T.

To avoid concentration of risks and a have a good balance in their portfolio, IRDAI investment norms stipulate that an insurance company should limit their investments in individual companies at 15 percent.
While it was anticipated earlier that LIC will be allowed to stay above 15 percent, the regulator has clarified that they will not be given a special dispensation.

Apart from the fact that LIC has exceeded 15 percent stake in ITC, a public interest litigation (PIL) was filed in the Bombay High Court which has raised concerns about large government entities investing in tobacco companies. However, LIC had responded to that petition saying that investing in tobacco firms per se is not illegal as per IRDAI norms. They had also said that they looked at it purely from an investment and returns point of view.