Buzz Update The government has amended FEMA regulations to allow 20 per cent FDI in LIC TOU

Buzz Update The government has amended FEMA regulations to allow 20 per cent FDI in LIC

 TOU

The government has amended FEMA regulations to allow 20 per cent FDI in LIC

PTI

New Delhi, April 17

The government has amended the provisions of the Foreign Exchange Management Act (FEMA), paving the way for foreign direct investment of up to 20 per cent in insurance giant LIC.

The government plans to reduce its stake in LIC through an initial public offering (IPO). LIC filed a draft red herring prospectus (DRHP) with market regulator Sebi for an IPO in February.

Last month, SEBI approved the draft papers and the insurance company is in the process of filing a request for a proposal with changes.

Following Cabinet approval, the Department of Industrial Promotion and Internal Trade (DPIIT) revised its foreign direct investment (FDI) policy to facilitate foreign investment in LIC ahead of the mega public offer on March 14.

FEMA notification is required to enforce regulations issued by DPIIT via press note, including FDI policy changes that allow large foreign portfolio investors to subscribe to LIC shares.

“These regulations may be called the Foreign Exchange Management (Non-Debt Instruments) (Amendment) Rules, 2022,” a recently released Gazette notification said.

The notification included a paragraph in the existing policy, allowing FDI of up to 20% in LIC through automatic route.

Under the current FDI policy, it has been decided to allow foreign investment of up to 20 per cent in LIC and other corporate entities, as the limit for foreign inflows to public sector banks is 20 per cent.

“Foreign investment in LIC shall be subject to the provisions of the Life Insurance Corporation Act, 1956, as amended from time to time (LIC Act) and, as applicable, subject to the provisions of the Insurance Act, 1938, as amended from time to time. To LIC. ”

SEBI has approved a draft prospectus to sell 5 per cent stake in the government for Rs 63,000 crore, setting the stage for the largest public offering in the country.

According to the draft document, the value of LIC embedded by Milliman Advisors, an international actuarial company, as of September 30, 2021, is approximately Rs. 5.4 lakh crore.

Although DRHP does not disclose the market value of LIC, by industry standards it is almost three times the embedded value or about Rs. 16 lakh crore.

The LIC public issue is expected to be the largest IPO in the history of the Indian stock market. Once listed, the market value of LIC is comparable to that of top companies such as RIL and TCS.

So far, the total amount raised from Paytm’s IPO in 2021 is Rs. 18,300 crore, while Coal India (2010) was worth about Rs. 15,500 crore and Reliance Power (2008) Rs. 11,700 crores.

if you want to read this article from the original credit source of the article then you can read from here.

Leave a Reply