LIC-IDBI Deal: Should It Be A Cause Of Worry For LIC Policyholders?

LIC's credibility as a most trusted brand has been kept intact over the years even after the state-run insurer has come to the rescue of several debt-burdened companies. And this time around it is attempting to turn the financial misfortune of IDBI Bank.

Reports from various leading newspapers suggest that to buy a stake in the mid-tier bank, the company has also offloaded its assets to grab a stake in the banker.

LIC-IDBI Deal: Should It Be A Cause Of Worry For LIC Policyholders?

About the LIC-IDBI deal

The largest insurance company LIC is planning a majority stake of up to 51% in the state-run banker. And in this context, leading news channel reported that the stake buy in the lender is not without conditions and in its report, IRDA member is quoted as saying, "LIC's investment of up to 51 percent will have to be subjected to a time bound exit."

IDBI bank on the back of NPA provision crisis reported a loss to the tune of Rs 5,662.76 crore during the January-March quarter this year.

The approved deal is expected to benefit the lender as it will be able to realign and restructure its assets portfolio. Also, the corporation will be able to tap the banks' 2000 branches for selling its products via the bancassurance channel.

Also, on the occasion, it was made clear that neither the corporation is intending to buy-out the bank nor is it a part of the government's divestment plan.

For LIC policyholder is the deal any worry call?

As per experts, the deal is a drop in the Corporation's vast investment basket and so far with no misses, investors or LIC policyholders need not to panic whose substantial input of Rs. 10,000- Rs. 13,000 crore will be put in the deal.

This is yet another investment through which the Corporation eyes a win-win deal for both the parties. And hence LIC policyholders are expected to remain fully immune and the functioning of the Corporation will go through as usual.

It can through impact policyholders who own participating policies in which they are eligible to receive Corporation's profits as bonuses.

Goodreturns.in