DoP may invest Rs 225 cr in stocks next year

The department of posts (DoP) may venture into the stock market with an initial amount of about Rs 225 crore, a portion of interest earned from life insurance schemes of  the post office, with a view to earn better returns for its investors.

"The corpus of rural postal life insurance scheme (RPLI) and postal life insurance scheme stands at about Rs 10,000 crore. Next year, the interest and premium of this corpus, excluding the outgo, is likely to be Rs 1,500 crore. According to the IRDA norms, 15% of the Rs 1,500 can be
invested in equities from the next financial year," department of post officials said here.

As per IRDA norms, majority of the interest income will go towards government-approved securities which will act as a safety cushion for investors as compared to the vagaries of the stock market.

Returns from the stock market will be put in the Rs 10,000 crore corpus which will give bonus to the policy holders. Telecom Minister Dayanidhi Maran today said DoP is working towards this initiative.

Officials said the finance ministry had earlier told DoP to finalise this move by September 30, 2006; however, DoP has sought time till March 2007 as it is busy with the groundwork for entry into the stock market.

The Rs 10,000 crore corpus will be frozen into special depository receipts (SDRs).