The government denied media speculation on the LIC upcoming IPO on Sunday, saying the LIC IPO is unlikely to take place in the current fiscal year, which ends in March 2022. “The LIC IPO would be achievable this fiscal year, contrary to media conjecture. The IPO is planned to take place in the current fiscal year’s fourth quarter.”
The government is counting on the LIC IPO and BPCL strategic sales to help it reach its disinvestment goals. The government is making significant progress on disinvestment, according to the Finance Minister.
The Cabinet Committee for Economic Affairs provided its approval in essence for LIC’s listing in July. The administration has already employed 10 merchant bankers for the operation. The government amended the Life Insurance Corporation Act, 1956, earlier this year to make it easier for LIC to be listed. According to the amendment, the union government would own at least 75% of LIC for the first five years following the IPO, and at least 51% at all times after that.
LIC IPO: LIC to improves asset quality ahead of its IPO
Insurance giant LIC has enhanced its asset quality for the financial year ending March 2021, ahead of its anticipated initial public offering (IPO). As per the current LIC annual report, non-performing assets (NPAs) were INR 35,129.89 crore as on March 31, 2021, out of a total portfolio of INR 4,51,303.30 crore.
There is INR 254.37 crore in sub-standard assets, INR 20,369.17 crore in dubious assets, and INR 14,506.35 crore in loss assets. According to the IRDAI standards, an amount of INR 34,934.97 crore is given in the books of accounts for non-performing assets.
At the end of March 2021, the gross NPA percentage was 7.78%, while the net NPA percentage was 0.05%. This is lower than the previous year’s gross NPA of 8.17 percent and net NPA of 0.79 percent.
In absolute terms, NPAs were INR 36,694.20 crore in 2019-20, out of total debt of INR 4,49,364.87 crore. Banks have a different stress threshold than insurers. LIC typically makes full provisions for all non-performing assets in its loan portfolio. The company has put aside INR 37,341.6 crore in provisions, of which INR 34,934.97 crore is for dubious, sub-standard, and lost assets.
The annual report said, “The management has assessed the asset quality and performance of investments in respect of real estate, loans, investments, other fixed assets, and suitable provision for impairment/diminution in value of investments/assets has been prepared for wherever applicable.”
LIC IPO: What Finance minister has to say upon it
With a market value of INR 8-10 lakh crore, LIC has the potential to become one of the largest domestic corporations if it is listed. “We are moving with each of them,” the Finance Minister said recently of the LIC IPO and the strategic sale of BPCL. “The details demand a lot of time.” She went on to say that tying up loose ends across departments takes time and that it is being sped up.