Budget 2020: Govt to sell stake in LIC through IPO, says Sitharaman

Centre trying to privatise LIC Employees JAC

Budget 2020: Govt to sell stake in LIC through IPO, says Sitharaman

Finance Minister Nirmala Sitharaman on Saturday said a clean, reliable and robust financial sector is required for achieving the ambitious target of Dollars 5 trillion economy.

The listing of LIC is part of the government's disinvestment initiative.

Currently, the government owns the entire 100 per cent stake in LIC.

Paring its stake in the insurance giant will help the government meet its divestment target, which has been increased to 2.1 trillion rupees ($29.55 billion) in financial year 2021 compared to 1.05 trillion rupees in the current fiscal.

"Being a government-owned entity, it is likely to see valuation gap versus private players", Gandhi said, adding that at even 25-30 per cent of its AUM, the company can be valued at around Rs 8-10 lakh crore. The new investors will seek complete independance in putting the governance framework including independant directors, nominee directors.

West Bengal chief minister Mamata Banerjee on Saturday slammed the Central government's proposal to sell a part of its shares in LIC, describing it as a plan to "ambush" the legacy of public institutions.

The Bharatiya Mazdoor Sangh (BMS), an RSS affiliate, has termed the budget proposal on disinvestment of the LIC and IDBI as "bad economics". "The government's intention is to get out of IDBI Bank", said Atanu Chakraborty (secretary) ministry of finance, Department of Economic Affairs.

"In order to provide greater access to financial markets, unlock true value and induce market discipline, the Government has proposed sale of a part of its holding in LIC by way of Initial Public Offer (IPO)", Sitharaman said during her Budget speech that lasted more than 2.5 hours.

"We are allowing retail investors to participate in wealth creation", Sitharaman had said. In April past year, LIC acquired controlling stake in state-run lender IDBI Bank, thereby making it a private sector bank. It balance sheet is Rs 31 lakh crore.

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