IRDA said that the regulatory oversight on LIC is quite comprehensive to the extent that it requires monitoring both prudential and market conduct operations of LIC
Life Insurance Corporation of India (LIC) may be required to wait for some more time before they are allowed by the insurance regulator to invest up to 30% of equity of a company. With international financial agencies raising concerns over the insurance regulator’s incomplete oversight of LIC, industry experts said that the cap may not be raised very soon.
The Insurance Regulatory and Development Authority (Irda) had recently increased the equity cap for insurers from 10% to 12% and 15%, depending on the size of the controlled fund of an insurer. LIC is allowed to invest 15%.
Since the 10% cap on equity investment in a company by an insurer came into force in 2008, LIC had been lobbying for this relaxation, as it has exhausted the limit in various blue-chip stocks. LIC has sought an increase to have more headroom while transacting in good scrips. However, the former Irda chairman J Hari Narayan had clearly said that LIC would have to adhere to the existing limits for other insurers.
“Though the finance ministry officials may have given an informal nod to LIC to go up to 30% in equity investment, it is unlikely that Irda will notify this immediately. If they do, the regulator is likely to face criticism from international bodies for preferential treatment,” said a senior insurance consultant.
International Monetary Fund (IMF) in one of its detailed assessment reports on India’s adherence to Insurance Core Principles had said that the current uncertainty regarding Irda’s control of its funding and budget, its incomplete oversight of LIC, and the reserve powers of the central government to direct its activities all potentially detract from the supervisor’s powers and independence.
Responding to these concerns, IRDA had said that the regulatory oversight on LIC is quite comprehensive to the extent that it requires monitoring both prudential and market conduct operations of LIC. “Though LIC Act excludes the applicability of certain provisions of Insurance Act, 1938, nevertheless there is no dilution on the regulatory oversight on LIC,” it said.
In an interview to Business Standard LIC Chairman S K Roy had said that they were hopeful of getting a solution for raising equity exposure cap in a single company.
“We are still engaging with the regulator and we are hopeful that we will get a solution to this sooner than later. We don't want to be seen to be non-compliant and that is why we are engaging. We have made a representation and it is being actively considered,” he had said.
Life Insurance Corporation of India (LIC) may be required to wait for some more time before they are allowed by the insurance regulator to invest up to 30% of equity of a company. With international financial agencies raising concerns over the insurance regulator’s incomplete oversight of LIC, industry experts said that the cap may not be raised very soon.
The Insurance Regulatory and Development Authority (Irda) had recently increased the equity cap for insurers from 10% to 12% and 15%, depending on the size of the controlled fund of an insurer. LIC is allowed to invest 15%.
Since the 10% cap on equity investment in a company by an insurer came into force in 2008, LIC had been lobbying for this relaxation, as it has exhausted the limit in various blue-chip stocks. LIC has sought an increase to have more headroom while transacting in good scrips. However, the former Irda chairman J Hari Narayan had clearly said that LIC would have to adhere to the existing limits for other insurers.
“Though the finance ministry officials may have given an informal nod to LIC to go up to 30% in equity investment, it is unlikely that Irda will notify this immediately. If they do, the regulator is likely to face criticism from international bodies for preferential treatment,” said a senior insurance consultant.
International Monetary Fund (IMF) in one of its detailed assessment reports on India’s adherence to Insurance Core Principles had said that the current uncertainty regarding Irda’s control of its funding and budget, its incomplete oversight of LIC, and the reserve powers of the central government to direct its activities all potentially detract from the supervisor’s powers and independence.
Responding to these concerns, IRDA had said that the regulatory oversight on LIC is quite comprehensive to the extent that it requires monitoring both prudential and market conduct operations of LIC. “Though LIC Act excludes the applicability of certain provisions of Insurance Act, 1938, nevertheless there is no dilution on the regulatory oversight on LIC,” it said.
In an interview to Business Standard LIC Chairman S K Roy had said that they were hopeful of getting a solution for raising equity exposure cap in a single company.
“We are still engaging with the regulator and we are hopeful that we will get a solution to this sooner than later. We don't want to be seen to be non-compliant and that is why we are engaging. We have made a representation and it is being actively considered,” he had said.
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