Lic, Gic To Follow Irda Norms On Uti Deals

State-owned insurance companies that have been asked to bail out Unit Trust of India (UTI) will conform their investment decisions in keeping with the norms laid down by the Insurance Regulatory and Development Authority (IRDA), unless there are written instructions from the government insisting otherwise.

"Whatever we pick up from the UTI portfolio, it will be as per the IRDA investment norms. Or we need written instructions from the government," said General Insurance Corporation of India's (GIC) managing director, P C Ghosh.

The IRDA chief, N Rangachary had earlier in the day warned the state insurers that in their decision to help bailout UTI, they would still be expected to conform with the investment norms.

State insurers have not received any proposals either from the government or UTI for bailing out the beleaguered financial institution.

As small investors will be allowed to redeem their holding only from August, Life Insurance Corporation of India (LIC) officials pointed out that there was no immediate need of funds at this point of time.

"Our role will be limited to that of purchasing the equity that UTI chooses to sell so that the same is not offloaded in the secondary market," he added.

GIC has no intention of saving "someone else (UTI) at our cost", Ghosh added. He said: "Our investment decision to pick up UTI portfolio will depend on the market trend, and the rating of the corporate. And it will also have to tally with our daily prepared list of scrips to be purchased".

State insurers do not expect picking up UTI's equity portfolio to have any negative bearing on their performance as the investment decision would first be scrutinised by the investment committee.

Each institution's role would be limited in keeping with its capacity, said senior officials. "LIC's resources being far higher, the amount of shares we pick up would be in conformity with the ratio of our annual accretion," he added.