Government sources told CNBC-TV18 on February 26 that the Union Cabinet approved foreign direct investment in the Life Insurance Corporation of India.
Under the automatic route in LIC, up to 20 percent FDI will be allowed, as well as the existing FDI policy.
The FDI ceiling for public sector banks is 20 percent, while the limit for LIC has not changed. Automatic route is expected to expedite the capital raising process.
The sources said that the FDI reform will facilitate foreign investment in LIC and other corporate bodies for which the government may have a requirement for disinvestment.
The reform will make it easier to do business and lead to more foreign direct investment. They said that it will ensure alignment with the overall intent of the FDI policy at the same time.
The meeting of the Union Cabinet and Cabinet Committee on Economic Affairs was scheduled to take place today.
The proposal to allow foreign investment in LIC was expected to be approved by the Cabinet.
A special provision for FDI in LIC was suggested by the proposal.
The government plans to sell stake in LIC via IPO by March 2022.
Foreign investment is allowed in insurance companies and Intermediaries according to the existing FDI policy issued by the Department for Promotion of Industry and Internal Trade.
Since LIC is neither a company nor an intermediary, it was not covered by either. Further, no provision of FDI under either the LIC Act, 1956 or the Insurance Act, 1938 or the regulations has been made. Even the Insurance Regulatory and Development Authority Act, 1999 doesn't have such provisions.
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