Life Insurance Corporation of India (LIC), the country’s largest insurance entity, has come to the rescue on numerous occasions when banks were in need of capital. In the last four years, LIC has invested nearly Rs.13,600 crore in Indian banks, mostly government-owned, by way of preferential allotment of equity shares, data collated by Prime Database show.
Public Sector Banks (PSBs) often knock on LIC’s door for funds when facing huge capital needs due to the mounting pressure of bad loans as well as to comply with the Basel-III requirements (a global regulatory framework for banks’ capital adequacy). Banks have to set aside more capital if loans turn non-performing.
