Lic & #39;S Exposure To Banking At Rs 4,225 Crore

The Life Insurance Corporation of India's (LIC) exposure to the Indian banking industry stands at Rs 4,224.82 crore as on March 31, 2001. This is possibly the largest exposure by any single entity to the banking sector. The exposure to this sector includes equity, public sector bonds and non-convertible debentures, tier II capital, housing loans and approved marketable securities.

The majority of LIC exposure 29.85 per cent is invested in the tier II capital of banks and their fixed deposits. In absolute term, this is to the tune of Rs 1,261.24 crore. It has also taken a sizable exposure -- 24.27 per cent -- to the non-convertible debentures and bonds of banks aggregating Rs 1,025.45 crore.

The state life insurer has large equity exposure to Indian banks, which stands at Rs 925.94 crore, and accounts for 21.91 per cent of the entire exposure to the banking sector.

The bulk of LIC's equity holding is in public sector banks accounting for over Rs 880 crore. The maximum is invested in State Bank of India (Rs 526.78 crore) followed by Corporation Bank (Rs 130.69 crore), Bank of Baroda (Rs 99.9 crore), Oriental Bank of Commerce (Rs 78.06 crore) and Bank of India (Rs 28.56 crore).

Its stakes are lower in private sector banks, both new and old, at just around Rs 44 crore. The maximum has been invested in UTI Bank (Rs 13.57 crore), followed by IDBI Bank (Rs 6.63 crore) and IndusInd Bank (Rs 5.58 crore). LIC's equity holding in cooperative banks is negligible at just over Rs 1.2 crore.

Even as LIC's total exposure to the banking sector is large, the equity holding is low at around 1 to 2 per cent with the exception of three to four banks Corporation Bank (27 per cent), Oriental Bank of Commerce (9 per cent) and State Bank of India (around 5 per cent). On its proposed buying out of select Unit Trust of India equity portfolio, LIC holding in Corporation Bank and Oriental Bank of Commerce will go up by 1.23 per cent and 2.28 per cent, respectively. It has also agreed to pick up UTI stake in SBI.

The LIC investment committee has, however, decided against picking up some stocks in the financial sector like that of IDBI, Vysya Bank, Bank of Baroda and Bank of India.