LIC open to raising its Corporation Bank stake

The Life Insurance Corporation of India (LIC) is open to increasing its stake in Corporation Bank from the present 26 per cent.

S B Mathur, chairman of LIC, said, "When there is an opportunity and the corporation is sure that it wants to invest (more) in the bank, we will go for it."

Corporation Bank chairman & managing director K Cherian Varghese had recently pointed out that the bank was not averse to raising more capital from LIC if needed for acquisition purposes.

The Mangalore-based Corporation Bank had got board approval to scout for a bank and grow inorganically. This is the first instance of a public sector bank getting the board nod for such an acquisition ever since finance minister P Chidambaram flagged off the issue of consolidation in the banking sector last month.

Mathur also said the insurance behemoth was ready to increase exposure to the equity market. LIC has recently invested close to Rs 4,000 crore in the equity markets.

"As per prudential norms we can invest 20 per cent of the capital employed in a company and 50 per cent of this can be in equity so we cannot say how much will go in equity. But at the moment it adds up to around 8.5 per cent of the total funds."

He said that the corporation was at the moment looking at investing into the NTPC issue. He, however, did not disclose how much the corporation would invest into the issue. He said that the two main criteria which the corporation looks at before investing in a company is the potential of growth and liquidity.

Mathur also said that as and when the opportunity presents itself the corporation was open to investing into banks but nothing was in the offing at the moment.

The corporation also plans to launch four new products in the coming three to four months once the Insurance Regulatory and Development Authority (IRDA) gives approval.

"The policies that would be coming are a unit-linked pension scheme, where the minimum sum assured is higher than that of the earlier policy, another would be a product for the high income people, the third product would be a combination of endowment and pension scheme and the fourth would be in the children's segment where the maturity is paid in the later stages of the policy. In this product instead of paying the maturity in one go it would be paid starting from 3-4 years in advance which would help the child for pursuing higher education," Mathur said.

He said that the corporation has regained lost ground in the last couple of months and currently has a market share of around 87 per cent.

Total income that LIC earned last year was Rs 93 lakh crore and including the income from pension scheme it was close to Rs 1 lakh crore. The new premium income earned during this period was Rs 11,800 crore.

"The premium income that the corporation earned was around Rs 63,000 crore and we expect it to grow by around 25 per cent to cross Rs 75,000 crore by the end of the current fiscal."