The Union Cabinet on Friday approved a proposal to table a Bill in Parliament to increase the paid-up capital of state-run Life Insurance Corporation (LIC) from Rs 5 crore to Rs 100 crore to bring its capital structure on a par with other players.
LIC is governed by a separate Act — the LIC Act, 1956 — which fixed its capital at Rs 5 crore. This has created disparity in the insurance industry as other players need a minimum of Rs 100 crore as per the rules of the Insurance Act, 1938.
So, the government has to amend the LIC Act to make its provisions with regard to capital consonant with the Insurance Act.
Besides increasing capital to Rs 100 crore, the amendment will also give flexibility to the government to further enhance LIC’s capital base as per solvency requirements.
The Bill will be tabled in the Lok Sabha when Parliament reconvenes in December.
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