Ahead of the upcoming Life Insurance Company’s (LIC) initial public offering (IPO), the Union Cabinet has cleared up to 20 percent foreign direct investment (FDI) under the direct route in the public sector insurer, government sources told CNBC-TV18 on Saturday.
The amendment to permit FDI in LIC and further simplify and enhance the existing FDI Policy was approved at the meeting of the Union Cabinet and the Cabinet Committee on Economic Affairs (CCEA) earlier today.
Since as per the present FDI policy, the ceiling for public sector banks is 20 percent on the government approval route, it has been decided to allow
foreign investment up to that mark for LIC and such other corporate bodies, sources said.
Further, in order to expedite the capital raising process, such FDI has been kept on the automatic route, as is in the case of the rest of the insurance sector, they added.
The FDI reform would facilitate foreign investment in LIC and other corporate bodies for which the government may have a requirement for disinvestment purposes, they said. It will facilitate ease of doing business and lead to greater FDI inflows, and at the same time, ensure alignment with the overall intent/objective of FDI Policy
The Cabinet’s decision came just days ahead of the
LIC IPO that is likely to be launched in March. The government is looking to sell a 5 percent stake in the public sector insurance company via the public issue.
