Union Budget: India's largest financial institution, LIC, to be publicly listed

Union Budget: India's largest financial institution, LIC, to be publicly listed”

Budget 2020 announcement that insurance behemoth LIC will be listed was well received by market participants who said this will be "IPO of the decade" akin to the Saudi Aramco listing. Public share issuance allows a company to raise capital from public investors.

This year's disinvestment target has two components - Rs 120,000 crore from disinvestment receipts and Rs 90,000 crore from disinvestment of PSU banks and financial institutions.

In the current financial year so far, the government has mopped up about Rs 18,000 crore by way of disinvestment.

In her Budget speech, Sitharaman also proposed that the government will sell its stake in IDBI Bank to private investors and amend Banking Regulation Act to strengthen co-operative banks.

She said that the deposit insurance cover will be hiked to Rs. 5 lakh from the current Rs. 1 lakh.

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The company manages assets of more than Rs 31.11 lakh crore and has a market value of Rs 28.74 lakh crore. The scheme covers all banks operating in the country, including private sector, co-operative and branches of foreign banks in India.

The government now holds 47.11 per cent, while LIC is the majority shareholder holding 51 per cent stake in IDBI Bank.

For three years between 2016-17 and 2018-19, the government exceeded the BE targets for disinvestment. It has already invited bids from potential buyers for 100% stake sale in Air India and is also going ahead with divestment in BPCL, Shipping Corporation and Container Corporation. While the Budget had pegged target at Rs 56,500 crore, the government was able to mop up Rs 46,247 crore.

In what could be seen as a leap in disinvestment ambitions, the Centre has chose to go for the public listing of the country's largest financial institution, the Life Insurance Corporation (LIC). Finance Ministry sources said the government expects these big-ticket disinvestments to be completed in the next financial year, providing the Centre with fiscal cushion amid the slack in tax revenues.

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