LIC to get time to offload stakes in companiesSeptember 26th, 2008 - 8:12 pm ICT by IANS
New Delhi, Sep 26 (IANS) India’s insurance regulator will provide “reasonable time” to the state-owned Life Insurance Corp (LIC) to bring down its stake in various companies to the prescribed 10 percent level, a senior official said Friday.”We want to give reasonable time so that the transition is smooth and LIC does not get lower returns on account of hurried sale of shares,” R. Kannan, member of the Insurance Regulatory and Development Authority (IRDA), told reporters on the sidelines of a business meet.
Kannan said the IRDA is in talks with the LIC and will give it due consideration, he said.
Last month, the IRDA issued investment guidelines that restrict the insurer from investing more than 10 percent in a company.
LIC holds over 10 percent in various blue chip companies that include Corporation Bank, Cipla, Mahindra and Mahindra, Maruti Suzuki, Mahanagar Telephone Nigam Ltd, Tata Motors, Hindustan Petroleum Corp, Ranbaxy Labs, Oriental Bank, Dr Reddy’s Labs, Tata Steel and Reliance Infrastructure.
Kannan also said the IRDA would by March 2009 come out with norms for risk-based capital - the minimum amount of capital an insurance company needs to support its overall business operations.
Responding to a question on what action was contemplated for private insurer Tata AIG after AIG nearly went into bankruptcy before being bailed out by the US government, Kannan said the IRDA has not asked for any solvency report from the company and there was no need for pressing panic button in the Indian context.
“Indian insurance sector is insulated from the global financial turmoil on account of the strict regulatory mechanism that govern the industry. Yet, the government is monitoring every development that is taking place to ward off any adverse eventualities in the future,” he added.
Tags: global financial turmoil, hindustan petroleum, hindustan petroleum corp, indian insurance sector, mahanagar telephone nigam, mahanagar telephone nigam ltd, mahindra and mahindra, maruti suzuki, ranbaxy labs, tata aig