LIC IPO will not impact customers, employees in any way: Chairman

Stressing that the proposed Initial Public Offering should not be seen as privatisation, Life Insurance Corporation (LIC) of India Chairman MR Kumar on Friday said that it will not impact the customers and employees of the state owned life insurer in any way.

In a bid to assuage concerns of protesting employees of LIC, Kumar also pointed out that state run public sector banks, General Insurance Corporation of India as well as state run general insurer New India Assurance are also listed.

“There is no question of any privatisation. We will address concerns. Most public sector banks and general insurance companies remain government owned entities even after listing,” he said when asked about the concern from LIC employees at a press conference.

He also stressed that customers and policyholders of LIC should not worry about claims post listing as Finance Minister Nirmala Sitharaman has already assured that LIC policies will retain their sovereign guarantee.

Stressing that the perception of LIC is positive with its 29 crore customer base and 12 lakh agent network, Kumar said the insurance behemoth will further build on it for its IPO and any negative perception will be addressed.

The Finance Minister in the Union Budget 2020-21 had announced plans of an IPO for LIC, which has led to country wide protests by the insurer’s employee unions.

Economic Affairs Secretary Atanu Chakraborty had recently said that it would take eight to nine months months to prepare accounts and do the required legal tweaking before an IPO of the insurance behemoth could be launched but said it would be done before March 31, 2020.

Kumar declined to give a timeline for the listing but said they would be working with the government on the transaction.

“The valuation has to be done,” he said, adding that he will be visiting New Delhi soon for further talks. Significantly, the LIC Act will also have to be amended before the listing takes place.

When asked about how the IPO will impact its operations and transparency, Kumar said the corporate governance would have to increase but stressed that LIC is already very transparent. “We are not mandated to do so but we still publish our quarterly results,” he pointed out.

IDBI Bank

Responding to questions on IDBI Bank in which it owns majority 51 per cent stake, Kumar said that it has become its top bancassurance partner and may cross premium of Rs 1,000 crore this fiscal. “They had originally estimated Rs 200 crore but they have already reached Rs 500 crore,” he said.

On the issue of reducing its holding in the private sector bank, Kumar said that LIC will not do any offloading as of now but will wait for better price.

He also noted that the insurance regulator IRDAI has not fixed a timeline for LIC to prune its stake to 15 per cent in the bank but the Reserve Bank of India has given it 12 year time period. “We may not want to hold for that long as we are listing,” he said.

The Budget had also proposed that the government would sell off its remaining stake in IDBI Bank. The LIC Chairman is hopeful that with more private investors coming in, the bank’s share price would improve.

He also expressed confidence that the bank will soon be out of the preventive corrective action norms and start to lend more and do well.