20% FDI in LIC without Approval – GOI Approved

20% FDI in LIC without Approval

Life Insurance Corporation of India (LIC) is an Indian statutory insurance and investment corporation under the ownership of Government of India. At present the Government holds 100% stake in LIC. The LIC is going for an offer for sale (OFS), i.e. IPO, by the Government of India.

The Govt. has introduced certain amendments in RBI regulations w.r.t. FDI norms:

  1. The government has amended rules of the Foreign Exchange Management Act (FEMA),
  2. The Govt. of India, has approved foreign direct investment (FDI) of up to 20% under the automatic route in Life Insurance Corporation (LIC) of India,
  3. The Department for Promotion of Industry and Internal Trade (DPIIT) on March 14 had already amended the Foreign Direct Investment (FDI) policy to facilitate overseas investment in LIC ahead of the mega public offer.
  4. Ministry has introduced “the Foreign Exchange Management (Non-debt Instruments) (Amendment) Rules, 2022” in this regard.
  5. The Govt. approved certain important changes to the FDI policy aimed at improving ease of doing business and in turn higher investments into the country and job creation.
  6. The govt. has modified the definition of the Indian Company and it covers “body corporates” established or constituted by or under any central or state act.
  7. The change in the FDI policy for LIC will ensure that such investors do not face any hurdles while subscribing for the public offer.
  8. The regulatory authority SEBI has already approved the draft prospectus for sale of a 5% stake by the govt.
  9. “Foreign investment in LIC shall be subject to the provisions of the Life Insurance Corporation Act, 1956, (LIC Act) as amended from time to time and such provisions of the Insurance Act, 1938, as amended from time to time, as are applicable to LIC.”
  10. Kindly note, presently 74% foreign direct investment through Automatic Route is allowed in other private insurance companies (except LIC).

Source: News and Regulation

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