How To Buy LIC's Shares: Update PAN And Demat Account Details

The Life Insurance Corporation of India (LIC) is set to sell its shares to common citizens in India. Apart from buying policies, pension schemes, and FDs from the public insurer, now people can buy shares of the company. To acquire LIC's shares, one needs to update PAN and Demat account details, as LIC recently stated.

LIC IPO

LIC on December 1 officially announced for its Indian policyholders the pre-requisites for investing in its proposed initial public offer (IPO). If a policyholder does not have a Demat account, he/she will be required to open a new Demat account, which will be mandatory to buy the shares. As far as news of the LIC IPO is concerned that are plans afoot to launch in this fiscal year as the govt is completing various formalities.

LIC's listing is going to be biggest ever IPO in India, as the union government is targeting to raise up to Rs. 90,000 crore ($12.2 billion) from the company's stake sale.

Update the PAN details

The Union Finance Ministry signaled, up to 10% of LIC's IPO could be reserved for the company's policyholders. The LIC Act, 1956 permits the corporate to designate its policyholders as one of the reserved categories in any LIC public offering in the future.

However, An official advertisement mentioned, "In order to participate in any such public offering, policyholders will need to ensure that their PAN details are updated in the Corporation's records." It added, "This is very important from a KYC perspective as well as your ability to participate in the proposed public offering by the LIC...this will be used to help you participate in the proposed offering."

(Also read: LIC Urges Customers To Link PAN With LIC Policies: Check How)

Importance of Demat account for LIC IPO

To buy any company shares, an investor needs to have a Demat account. At present, a Demat account is the easiest way to invest in shares and mutual funds, along with keeping track of the investment portfolio. Investors are also being asked to convert their physical shares into Demat. Hence, if you are considering investing in LIC IPO, then you must have a Demat account.

If you already have an existing Demat account, then you will have to update your Demat details with LIC, if you do not have a Demat account you are required to open one. With the Demat account, you can invest in multiple IPO and other company stocks, mutual funds. Opening a Demat account is an essential step for an investor who is willing to step into the equity market.

(Also read: How To Open A Demat Account In India And Why Is It Important For An Investor)

However, it is important to understand that investing in LIC insurance policies, or LIC pension schemes or LIC FDs is certainly different from investing in LIC IPO. The latter will have risks, generally involved with the equity markets. The IPO means listing in the stock market. So, the risks involved with the stock markets will be involved with LIC IPO. LIC insurance policies or pension schemes usually offer assured and secured income; those are not linked with the equity markets. So, investing in LIC IPO will depend on the investor's risk appetite. However, a policyholder must update his/her PAN details available with LIC, irrespective of the fact of IPO investment.

(Also read: How To Convert Physical Shares Into Demat And Why Is It Important?)