Currently the giant insurer can invest only 10 percent in listed companies.
The finance ministry has allowed LIC to invest up to 25 percent in a listed company. IRDA had reportedly mandated that insurance companies can invest not more than 10 per cent stake in a particular company but LIC already has more than 10 per cent stake in various companies such as L&T, Tata Steel, Axis Bank, UTI AMC and Punjab National Bank.
According to senior LIC official, the LIC Act, 1956 permits it to take its stake up to 25 per cent, while the IRDA Act, 1999 has capped the investment to 10 per cent.
LIC has been requesting IRDA to increase the investment cap because it has a huge reserve of cash and the cap is preventing for the company to get better exposure in the equity market. The finance ministry has agreed to this request and has increased LIC’s investment cap from 10 percent to 25 percent.