Foreign investment may be allowed before the IPO of the country’s largest insurance company LIC.
However, plans are being made to block China’s entry in foreign investors. This claim has been made in a report by news agency Reuters. Reuters has quoted sources as saying that the Indian government wants to prevent Chinese investors from buying shares in Life Insurance Corporation (LIC).
According to the report, China’s investment in companies like LIC can pose risks. This is the reason why the government is churning to stop Chinese investment, although the final decision has not been taken yet. According to the report, since the border dispute in Galwan Valley last year, the business situation has not remained the same. The government is continuously imposing anti-dumping charges on products imported from China. At the same time, many popular apps including Tiktok have also been banned.
Plan to raise up to 1 lakh crore: However, there has been no official response from the Ministry of Finance and LIC of the Government of India on the latest news of Reuters. At the same time, the Ministry of Foreign Affairs and Commerce of China have also not given any response so far. Let us tell you that the government will bring the IPO of LIC by the end of this financial year. Through this IPO, the government is hoping to raise around Rs 1 lakh crore by selling 5% to 10% stake. Along with this, LIC will be listed in the stock market.
What are the rules for LIC: According to the current FDI policy, 74 percent foreign investment is allowed in the insurance sector under the ‘automatic route’. However, these rules do not apply to Life Insurance Corporation of India (LIC). Under the existing rule, no foreign investor can invest in LIC.
However, the government is considering allowing foreign institutional investors to buy up to 20% of LIC’s offering. If this happens, then a foreign investor can buy a large stake in the country’s largest insurance company LIC. Sources also said that the government is yet to decide whether it will sell one tranche of shares or sell it in two tranches to raise the entire amount.