“Basically, we discussed the timelines for the proposed IPO and what are the remaining issues that need to be sorted out,” an official said after the meeting. The FM held a detailed discussion with Dipam secretary Tuhin Kanta Pandey and the LIC management.
The government is banking heavily on LIC’s IPO to come close to the Rs 1.75-lakh-crore disinvestment target for the current financial year, given that proposed sale of companies, such as oil retailer Bharat Petroleum, is unlikely to go through during the current fiscal. While the market has been sceptical of the public offer, which will be the largest issue in the Indian market, the government is keen to ensure that it goes through before March.
But, the Centre needs to provide some clarity on certain aspects, such as share of surplus or profits that will be transferred to the shareholders’ pool. Against the norm of 10% for other life insurance companies, LIC only has to transfer 5% of the surplus to shareholders’ fund, with the rest to be set aside for policyholders. Similarly, the FDI regime has to be aligned as the current rules do not allow overseas participation in the state-run behemoth.