LIC reserves cash to bail out government share sales
India’s largest insurer, Life Insurance Corporation (LIC) of India, which was supposed to invest Rs 50,000 crore in the equities market in the fiscal year 2012-13, has hardly invested around Rs. 8,500 crore in the first six months of the fiscal year. Last year, the insurer had bought shares worth Rs. 45,000 crore.
An official of LIC, who does not want to be identified said, “There are not many good offers in the market. The market is stabilizing now. So, we  hope we will be able to invest.â€
The state-run insurer was the biggest buyer of government securities, including explorer ONGC, last year where it had to buy nearly all the shares on  offer valued at Rs 12,000 crore. It also helped the government in re-capitalising state-run banks such as Punjab National Bank and Syndicate Bank and  invested Rs 8,000 crore. It has also exceeded the 10% limit in most of the banks post this investment.
Mr. Deven Choksey, Managing Director, KR Choksey Securities, said, “LIC should not invest in over-leveraged PSUs.” Many companies that government wants to divest are cash-rich so LIC’s investment should not be an issue.
In fact, The Children’s Investment Fund is disputing the government’s intervention in Coal India’s management with the directive that it should supply coal to power producers or face a penalty.
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