Private sector stake in LIC's portfolios declined 14.90%

Mumbai, Ta. September 26, 2019, Thursday

For the first time since then, the private sector's share in the portfolio of Life Insurance Corporation (LIC) has been low. According to an analysis, 5.7% of LIC's total investment is in private sector companies, while the rest is in public sector undertakings and public banks.

While LIC has aggressively participated in many disinvestments of public sector undertakings, LIC's investment in banks such as IDBI has been low for the private sector. This situation has been observed even though the performance of the private sector companies is stronger than that of the public sector companies.

The BSE PSU index has declined by 8% so far in the 7th, while the Sensex, which comprises a large number of private sector companies, has risen by 8% in the current year. Compared to the benchmark Sensex in the last 3 years, the PSU index has been weak.

Prior to this, the private sector's share in the portfolio of LICs was lower, with 5.7%. It rose to a peak of 5.9 percent in the first three, then declined for nine consecutive years and reached the current low level, said one analyst.

The public sector, on the other hand, is currently at the third largest level after the liberalization phase. At present, the share is 5.9% while in the 8th it is 5.3% and in 7.8%.

LIC is also invested in cooperative sectors. LIC's total investment stood at Rs 1.8 trillion. Of this, Rs1.5 trillion has been invested in securities in the stock market. LIC's loan book is valued at Rs 5 crore.

Through non-trading sources, LIC received a revenue of Rs. 5,8,3 crore as interest and earned a dividend of Rs. The yield of the year was 5.5%. In addition, the insurance corporation earned interest of Rs 1.8 crore on loan against the policy.

LIC's investment does not appear to be a competent allocation of capital. LIC is frequently supporting the government's disinvestment program. Given the government's disinvestment program of public sector undertakings, the portfolio of LICs is likely to see a decline in private sector investment.