India Post may use Rs 3,000cr for mkt investments

The department of posts may soon enter the stock market with a kitty of over Rs 3,000 crore. The department is finalising plans for investing the corpus of Rs 10,000 crore of its two life insurance schemes "� Postal Life Insurance (PLI) and Rural Post Office Life Insurance (RPLI).

The department has shortlisted various options, including investing a third of the money in the market based on the recommendations of global consultant AF Fergusson.

At present, the DoP parks the entire money with the ministry of finance, which gives it a special interest rate. "The ministry of finance will not offer special rates on deposits under these two insurance schemes from October 1, 2006. We will, therefore, have to find other investment opportunities, including the stock market," DoP Secretary U Srinivasa said.

Other options included freezing the existing corpus under the two insurance schemes and converting a third of it to dated securities, DoP officials added.

Raghavan also confirmed that AF Fergusson, in its report on investment options for the DoP, had recommended the formation of an asset management company.

"But we will take a decision only after careful examination of the proposals and also take adequate safeguards to ensure the safety of every penny of our investors' funds," he added.

Currently, there are about 27,00,00 PLI holders and 50,00,000 RPLI holders and the amount of funds in these schemes is estimated at Rs 8,500 crore and Rs 1,500 crore, respectively.

At present, only employees of the central and state governments, nationalised banks, universities, government-aided institutions, autonomous financial institutions and local bodies get PLI coverage. RPLI coverage is open to any person living in rural areas.

The DoP has also approached the government, demanding that its insurance business be offered a level playing field, along with other service providers, by removing the existing limitations imposed on the scope of its activities.

"We have sought the immediate lifting of all limitations and have demanded that we be allowed to introduce new insurance products and new features on existing policies," DoP officials added.

DoP officials also said the finance ministry's move to stop offering special depository rates would not have much of an impact on existing policy holders, but added that the current bonus rates of Rs 95 for every Rs 1,000, a sum assured on whole life policies, Rs 77 per Rs 1,000 for endowment policies and Rs 65 per Rs 1,000 for money-back policies would continue.