This proposal would benefit LIC in this way that there are lots of good companies where LIC's stake has already touched 10% but LIC would like to have more stake over there. Limit of 10% is a small amount which LIC reaches immediately. So 20% will obviously help LIC to increase its stake in good quality companies. LIC having an increased stake in other companies will make the stock prices of the companies less volatile. That would be helpful not only for LIC but for the market in general,” Siddhartha Bhamre, Analyst, Angel Broking, told this Citizen Journalist.
When IRDA gives the go ahead, the move will benefit equity investors, shareholders, as well LIC policy and instrument holders who look forward to a more stable LIC and a more profitbale and market-oriented one - at the same time investing its resources within a prescribed limit.
LIC already has 10% and more investment in many companies. Once the investment limit is increased, the state-owned life insurer will be the biggest beneficiary as the equity holdings of other private insurers are well below 10% in listed companies.
IRDA's step to increase the investment limit of life insurers to 20% will also boost the equity market as there will be more investment in the equities of the companies.
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