Budget 2020: LIC's IPO Coming; Govt to Also Sell its Entire Stake in IDBI Bank
Moneylife Digital Team 01 February 2020
With an aim to raise resources, the Life Insurance Corporation of India (LIC), which has been used by the government for various kinds of bailout, will be asked to go public. The government has decided to list LIC on the stock exchanges in FY2021. The initial public offering (IPO) of LIC could be one of the biggest in recent times. In addition, the government will also sell its entire stake in IDBI Bank.
 
In her Budget speech, finance minister Nirmala Sitharaman says, "Government will list LIC on the stock exchanges."
 
 
LIC, the country's largest insurer has its surplus increased 9.9% to Rs532.14 billion for 2018-19. This was the first time that LIC's surplus crossed the 500-billion-rupee mark. 
 
The proposal to list LIC is something which will be a big ticket disinvestment proposals to push revenues of the government. The current year disinvestment could not go beyond Rs18000 crore. The listing of the company is going to be complicated as it has huge investments in real estate, art and equity market, which may prove to be time consuming for valuation purposes.
 
Separately, the government will also sell its entire 46.5% in IDBI Bank to private, retail and institutional investors through the stock exchange. Post-acquisition by LIC, the lender has been classified as a private bank.
 
Finance minister Sitharaman says, “In the last few years, the government has taken concrete steps to bring our banking system to be robust.  However, there is a need for greater private capital. Accordingly, it is proposed to sell the balance holding of government in IDBI Bank to private, retail and institutional investors through the stock exchange.”  
 
In September last year, LIC of India and the government together infused Rs9,300 crore as equity capital into the bank. State-owned LIC, which is the promoter of the debt-ridden lender with 51%stake, will pump in an additional Rs4,743 crore to improve the bank's capital position.
Comments
Ramesh Poapt
3 years ago
why govt did not thought it earlier and roped LIC ?
Rajolu Ramam
3 years ago
What is the purpose of LIC? As a lay man, what I understand is collect premium fron the insurance policy holders and serve them by way of savings and in case of death of the policy holder, the policy amount
Is to be given to the nominees. The premium collected has to be invested and the income on investment has to be distributed
among the policy holders. Instead, it became a rescuer of the GOI when ever it needs. IDBI which was in heavy losses and high level NPAs was saved by LIC on the instructions by the Govt. To cover the huge deficit budget, they declared IPO of LIC in the budget. Milking LIC has become an easy option.


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