Life Insurance Corporation (LIC) will get about Rs 280 crore from the government for hiking its capital base.The finance ministry has also decided to marginally hike the interest subsidy to Rs 269.19 crore to LIC for meeting the additional cost of providing 9% return to senior citizens under the Varishtha Bima Yojana, official sources said today.LIC had demanded capital infusion from the government to meet the stiff solvency norms as prescribed by IRDA. The other options LIC was exploring were tapping the IPO market, and a government guarantee for meeting the norms.LIC has a capital base of Rs 5 crore as provided in the LIC Act, 1956. However, the insurer has set aside about Rs 10,000 crore specifically for meeting the solvency norms. IRDA, however, wanted LIC to provide another Rs 5,000 crore over the years.Finance minister P Chidambaram had promised to assist LIC in meeting the norms last year when he reviewed the operations of the insurer in Mumbai.Apart from hiking the capital base, the budgetary support would also help LIC expand its operations in the domestic and international arena.LIC is looking at an international footprint to become a global life insurance major, and is planning to open offices and branches in the Middle East, East and South Africa. It has also set its eyes on SAARC nations like Bangldesh, Nepal, Maldives and Pakistan once they open up the insurance sector to foreign players.
