The story up until now: In the Union Budget plan speech on February 1, Union Minister of Finance Nirmala Sitharaman announced that the federal government proposed to offer a part of its holding in Life Insurance coverage Corporation(LIC) by way of an initial public offering (IPO). The state insurance provider was established in 1956 through an Act of Parliament. Governed by the Life Insurance Coverage Corporation Act, 1956, every LIC policy is guaranteed by the federal government. Explaining the reasoning for divesting the federal government’s stake in LIC, Ms. Sitharaman said that listing would bring discipline while giving retail investors an opportunity to participate in wealth creation.
What is the implication for policyholders?
Prior to the federal government divests a part of its stake through a public problem, it will have to make sure that it amends the LIC Act, which to name a few things, guarantees a sovereign warranty for all policies under Section 37 of the Act. The Finance Ministry is in talks with the Law Ministry to amend the Act. The top brass of LIC are, however, banking on a government assurance on the problem. In a media interaction on Friday, LIC Chairman M.R. Kumar said: “There is no implication for insurance policy holders. The Financing Minister has clarified that sovereign assurance will continue. Th