LIC did not pay dividends in 2020-21, used free reserves to raise installment capital: Government
Government told Congress that LIC used free reserve to increase its paid capital
New Delhi:
The Life Insurance Corporation (LIC) did not pay any dividends to the government in the last financial year and used the free reserve to increase its installment capital, which has now increased to Rs 6,325 crore , the government told Rajya Sabha on Tuesday.
In 2019-20, the insurance giant, set for an initial public offering (IPO), paid Rs 2,610.75 crore as a dividend to the government from profits related to 2018-19.
Citing data received from LIC, Finance Minister Bhagwat Karad said no dividends have been paid for the period 2020-21 as the Insurance Development and Regulatory Authority of India (IRDAI) has directed the The insurance company does not pay dividends from profits related to the financial year ended. March 31, 2020.
The directive from IRDAI was introduced in the wake of the coronavirus pandemic so that companies can reserve capital to meet unusual circumstances, if any.
“The government, under the application of the LIC, has authorized the LIC to use the LIC’s free reserve to increase its installment capital. As a result, the LIC’s installment capital has increased to Rs 6,324.99, on the date December 31, 2021,” Mr. Karad said in a written response.
The central government is expected to file draft papers for the LIC’s major IPO with market regulator SEBI this month. The embedded value of LIC is estimated to be more than Rs 5 lakh crore.
