: Govt amends FEMA rules to allow 20% FDI in LIC #FinanceIndia #StockMarketNEWS #Business Press Trust of India New Delhi The government has amended rules of the Foreign Exchange Management Act

@StockMarketNEWS Wed 20 Apr, 2022

Posted in: #FinanceIndia #StockMarketNEWS #Business

Govt amends FEMA rules to allow 20% FDI in LIC #FinanceIndia #StockMarketNEWS #Business
Press Trust of India

New Delhi

The government has amended rules of the Foreign Exchange Management Act (FEMA), paving the way for up to 20% foreign direct investment (FDI) in the insurance behemoth LIC.

The government is planning to dilute its stake in LIC through the Initial Public Offering (IPO). LIC in February had filed the Draft Red Herring Prospectus (DRHP) before the markets regulator Sebi for the IPO.

Last month, SEBI gave approval to the draft papers and the insurer is in the process of filing a request for proposal with changes.

Following the Cabinet approval, the Department for Promotion of Industry and Internal Trade (DPIIT) on March 14 had amended the FDI policy to facilitate overseas investment in LIC ahead of the mega public offer.

FEMA notification was required to operationalise the provisions DPIIT issued through a press note, including FDI policy changes that will allow large foreign portfolio investors to subscribe to shares of LIC.

“These rules may be called the Foreign Exchange Management (Non-debt Instruments) (Amendment) Rules, 2022,??? said a gazette notification issued recently.

The notification has inserted a paragraph in the existing policy, allowing up to 20% FDI in LIC through the automatic route.

Since the foreign inflows’ ceiling for public sector banks is 20% under government approval route as per the present FDI policy, it has been decided to allow foreign investment of up to 20% in LIC and other such corporate bodies.

“Foreign investment in LIC shall be subject to the provisions of the Life Insurance Corporation Act, 1956, (LIC Act) as amended from time to time and such provisions of the Insurance Act, 1938, as amended from time to time, as are applicable to LIC,??? it said.

Setting the stage for the country’s biggest-ever public offering, SEBI has approved the draft prospectus for sale of a 5% stake by the government for an estimated Rs 63,000 crore.

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