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LIC capital base to be raised to Rs 100 cr
KOLKATA, NOV 1 (AGENCIES):
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Published on 2 Nov. 2008 12:44 AM IST
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Life Insurance Corp (LIC) will be in line with all other private insurance companies on the mandatory minimum equity front. The Cabinet has approved a Bill to be tabled in Parliament, to increase the paid-up capital of the state-run insurer to Rs 100 crore from the present Rs 5 crore. "LIC (Amendment) Bill, 2008 is being tabled," finance minister P Chidambaram said in Delhi on Friday. Once the Bill is passed, it would make LIC compliant with Insurance Regulatory & Development Authority (Irda) norms on the equity front.The Bill will be tabled separately from other insurance legislations like the Insurance (amendment) Bill, 2008, the General Insurance Business (nationalisation) Act, 1972 and the Insurance Regulatory & Development Authority Act, 1999. The increase in equity would mean the government would put in Rs 95 crore as shareholders funds, an LIC source told DNA Money. Irda norms stipulate that any insurance company must have a minimum paid-up capital of Rs 100 crore. For historical reasons, LIC conducted business with a capital of Rs 5 crore. Although the company never faced a problem, there was some pressure on it for maintaining a solvency margin of 150% - in line with other insurers - a couple of years back. The source, however, said, "We never faced a problem on the solvency issue and in fact have a solvency margin of 152% at present. We have an asset base of over Rs 8 lakh crore and a sovereign guarantee."

 
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