Centre keen on killing profit-making LIC, says union leader

Visakhapatnam The Government of India is bent upon weakening LIC by going for IPO and offloading its shareholding by notifying 27 amendments to LIC Act -1956, which was passed in the Budget session along with the Finance Bill, according to P. Satish, vice-president, South Central Zone Insurance Employees' Federation.

In an exclusive interview to Bizz Buzz, he said on Friday that LIC was established through an Act of Parliament in 1956. Since then it has been functioning like socially beneficial firm catering to the needs of needy sections and playing pivotal role in mobilising small savings of the people for the overall development of the country.

Referring to the amendments, he said recently the government gazetted 27 amendments paving the way for listing of LIC in stock markets and bringing the giant organisation under the provisions of Companies Act and SEBI Rules. He disputed the claim by some noted economists that the move will help fresh infusion of funds into the organisation.

Satish contended that LIC itself is investing Rs.3.5 to Rs.4.5 lakh crore every year for the development of the country. LIC had invested over Rs.31 lakh crore till now for the benefit of community at large." Out of this, LIC had invested Rs. 24,01,457 crore in Central, State Government securities, housing, irrigation roads etc. dispelling the myths that LIC needed resources from the markets.

He pointed out that even the arguments that listing of LIC enhances transparency are flawed as it (LIC) is a transparent and efficient board -managed institution. It makes its results public every quarter. It submits reports of its functioning every month to the Insurance Regulatory Development Authority of India (IRDA).The accounts are placed in the Parliament for scrutiny. If this is not transparent functioning, what else, he asked.

Stating that several listed companies have collapsed due to mismanagement and cited how some institutes like ILFS, DHFL,Yes Bank and Lakshmivilas Bank had suffered due to bad managerial practices.

He said even well-acclaimed insurance giants in the world (all listed companies) including AIG had faced turbulennce post-2008-09 economic crisis. AIG was virtually bailed out by the US Government with the pumping in of huge amount. On the other hand, LIC & other PSUs were known for achieving stability to the economy. When World Trade Centre of USA was targeted by terrorists on September 11, 2001, insurance companies of USA stoutly refused to settle the claims, till they were subsidised by the federal government. Whenever natural calamities like earthquakes, cyclones and tsumamis occur in various parts of the country, LIC fully settles all the claims, by waiving the statutory requirements.

The insurance employees' leader said LIC achieved all these milestones in corporate governance despite not being a listed company and wondered why the amendments were done to the Act to expedite its listing.

He said "in a country where only less than two percent of the population access the share market, unlocking the value of a mammoth financial organisation for the purpose of retail investors, will undermine the interests of 130 crore Indians.Only 3 percent of the total participants in the stock exchange are retail Investors.The number of demat account holders in India is around four crore,out of this only 0.95 percent are active.

He said that the brand value of LIC is immeasurable. Hence, it is preposterous to imagine that real value of LIC will unfold after its listing.