Insurance regulator IRDA has asked Life Insurance Corporation (LIC) to chalk-out a plan to reduce its stake in those companies where it holds over 10 per cent and expects a response in the next 15-20 days, a senior IRDA official said.
"In our bilateral discussions with LIC, we have asked them to come out with a clear plan for compliance with the norms for reduction of its stake in those blue-chip companies where it holds more than 10 per cent," Insurance Regulatory and Development Authority Member (Actuary) R Kannan told PTI here.
IRDA had last year said LIC should pare down its holding in companies where it holds over 10 per cent stake to the prescribed limit of maximum 10 per cent.
LIC is expected to chart its course of action and revert to IRDA with its plan of compliance in a few days, he said.
"Now, when it (LIC) is closing its accounts, it should come out with a clear strategy for bringing its holding down (to 10 per cent). We expect LIC to come out with its plan in the next 15-20 days," Kannan said.
Earlier, IRDA Chairman J Hari Narayan gave LIC a reprieve from bringing down its stake in the immediate-term.
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"We will not insist on LIC reducing its stake below 10 per cent for some time but have informed it that in whichever company it has a sub-10 per cent stake, it should not be hiked beyond this limit," Hari Narayan said.
Despite IRDA's directive, LIC has only marginally lowered its stake in a few Sensex companies where it holds stake over the prescribed limit in the last two quarters of the previous fiscal.
It reduced its stake in Grasim from 12.75 per cent as on quarter ended December 2008 to 12.57 per cent for the quarter ended March 09 (still above the prescribed 10 per cent limit).
Similarly, as per BSE data, it brought down stakes in ITC from 13.98 per cent in the third quarter of last fiscal to 13.61 per cent for the quarter ended March 09 and in HPCL from 16.03 per cent in Q3 FY 2009 to 16.01 per cent in Q4 of the previous year. It has also reduced stake in ACC from 17.48 per cent to 16.83 per cent and in Mahindra and Mahindra from 17.61 per cent in the third quarter to 17.30 per cent for the quarter ended March 2009.
However, LIC maintained its stake in two automobile firms -- Tata Motors and Maruti Suzuki — at 10.27 per cent and 11.05 per cent, respectively.
It raised its stake in Hindalco from 5.40 per cent as on quarter ended December 2008 to 10.42 per cent for the March quarter 2009.
IRDA, in December last year, increased the exposure of insurance companies to infrastructure companies from 10 per cent to 20 per cent.