Unwilling to divest in a hurry its holding in dividend-paying blue chip companies, Life Insurance Corporation of India (LIC) today asked the insurance regulator Insurance Regulatory & Development Authority (IRDA) for guidance on how and by when it should comply with the regulation to cap an insurance firm's exposure in individual firms at 10 per cent.
"If they are changing the goal posts, we are asking them to teach us how to score goals next time," said T S Vijayan, chairman of India's largest insurer LIC, which has equity investment of about two lakh crore in listed entities.
Stating that the limit was earlier put at 30 per cent, then reduced to 20 per cent and now to 10 per cent, he said, "There have been several limits. We have been law-abiding citizens. We went by earlier laws... But it has changed now, so we are wondering what to do with that. We are discussing with IRDA."
Stressing that as a business group, LIC would want maximum time for compliance, Vijayan said, "If you ask me, we would be comfortable with 50 years. We are not setting any time-frame for... It's all blue-chip companies and very good investment for us...Very good dividend. We are wondering why should we divest. We are not in a hurry."
Declining to divulge details of its discussions with IRDA on the subject, Vijayan said, "I am not competent to comment on that."
There are 10-20 companies where LIC has a holding of more than 10 per cent, he added.
Asked if it was a proper time to exit when markets were down, LIC Chairman said, "It's not bad time. If you exit from X company at this valuation, you are acquiring Y company at the same valuation. I am optimistic where to put money."
