Life Insurance Corporation of India (LIC) would invest Rs 31,000 crore in equities and corporate bonds in the next four months.
The corporation would invest Rs 11,000 crore in stocks and Rs 20,000 crore in non-convertible debentures, said a top LIC official.
The substantially large investments in the capital market by LIC comes at a time when FIIs are shying away from domestic equities and the Indian corporates are finding long-term funds hard to come by.
A number of corporates are now approaching LIC for funds as they are finding it difficult to raise resources from other sources, said Mr T.S. Vijayan, Chairman of LIC. The demand for funds from corporates is likely to continue, he said.
The largest insurer in the country would also be investing another Rs 18,000 crore in government securities. This would take LIC’s total investments in the remaining period of the current fiscal to around Rs 50,000 crore, over and above the Rs 1,02,476 crore it has already invested in the first eight months of the current financial year.
In the first eight months of the current fiscal, LIC has invested Rs 36,311 crore in G-Secs, Rs 29,000 crore in equities (secondary market) and Rs 23,190 crore in NCDs. In addition to this, LIC has also invested Rs 12,372 crore in the infrastructure and social sectors, Rs 1,342 crore in project loans, and Rs 164 crore in IPOs, said Mr N. Mohan Raj, Executive Director, LIC.
This is much higher than the total investment of Rs 97,738 crore made by the corporation in the first eight months of the last fiscal.
“Companies are taking the NCD route to raise resources. Highly rated, credit-worthy companies have raised resources by placing their NCDs with us. The coupon rate on the NCDs ranges between 11 and 13 per cent,” said Mr Mohan Raj, on the sidelines of a press meet to announce the launch of the corporation’s single premium endowment product – ‘Jeevan Aastha’.
Currently the corporation has an asset base of over Rs 8 lakh crore.
LIC is a major investor in stock markets and its actions even influence the price movements.
“We are long-term investors. We are trustees of our 23 crore policy holders’ money. We don’t get swayed by market movements,” said Mr Vijayan.
The prudence exercised by the corporation in making investments and loans, according to the Chairman, is underscored by the fact that the level of delinquencies was only 0.5 per cent.