5 Things To Know On Why Government Is Selling LIC.
5 Things To Know On Why Government Is Selling LIC. On 1set February Finance Minister Nirmala Sitharaman announced the stake sale from the country's largest insurance service provider LIC during in her second budget speech. After Bharat Petroleum and RBI Surplus capital Modi Government eyes on selling a stake from LIC India's largest Insurance company. On 1set February Finance Minister Nirmala Sitharaman announced the stake sale from the country's largest insurance service provider LIC during in her second budget speech. "Listing of companies on stock exchanges disciplines a company and provides access to financial markets and unlocks its value. It also gives an opportunity for retail investors to participate in the wealth so created. The government now proposes to sell a part of its holding in LIC by way of Initial Public Offer (IPO)." said the FM explaining the reasons behind the stake sale. Here are 5 Things To Know On Why Government Is Selling LIC. . LIC was formed by the Life Insurance Corporation Act 1956 so the government shall have to amend the act before proceeding. LIC is a 100% owned subsidiary of GOI so they are not likely to sell more than 10% of its stake. . According to the experts the listing of LIC IPO is likely to be held in the second half of the next fiscal making it India's companies in terms of market capitalization unlike TCS, Reliance and HDFC Bank. A valuation of around 8-10 lakh crore is to be expected to be fetched by the Government firm. . Modi government is ambitious over raising 2.1 lakh crore by FY2021 garnering Rs.70000 crore through this stake sale. Experts say that this will help the government to achieve it's highest ever disinvestment target and attract foreign investors. . The insurer has always maintained a gross stable NPA of 1.5-2%. From April - September 2019- 2020 LIC gross NPA rose to 6.10%. . The market share capital of LIC is 71.28% in a number of policies. Last year LIC has even bought a controlling stake in IDBI making it one of its many subsidiaries. LIC has also had a record asset of Rs 31 lakh crore under its management. This move has also created a worrisome environment for the policyholders. Now whether the government's decision will prove beneficial or no is worth to watch over. Also Read: How To Apply Pradhan Mantri Jan Aryogya Yojana Pradhanmantri Awas Yojna Benefits You Need To Know