The Life Insurance Corporation of India chairman S B Mathur on Monday said the corporation had no intention to pick up strategic stake in UTI Bank or in any other bank.
The corporation was, however, planning to provide for a balance of Rs 1,800 crore (Rs 18 billion) of the total Rs 10,300 crore (Rs 103 billion) solvency margin as per the Insurance and Regulatory Development Authority guidelines during the current fiscal.
"We have about 5-6 per cent stake in almost every bank and the decision for further increase in stake would be taken by our investment department. However, getting strategic stake in any of the banks is not on our mind," Mathur told reporters after signing a MoU with UCO Bank for bancassurance.
Asked whether it planned to acquire a strategic stake in UTI Bank, he said it was for the government to decide as to whom it was going to offer strategic stake of the bank.
"We are one of the promoters of UTI Bank and have already about 14 per cent holding in it. The government has to decide regarding who would have a strategic stake in the bank," he said, adding, the government will decide whether the control would rest with the strategic holder or non-strategic holder.
About creating solvency margin as per the IRDA regulation, Mathur said as per the LIC Act, the corporation was not supposed to provide for solvency margin, but IRDA had asked it to provide for the same.
"As per our valuation, we were supposed to create a solvency margin of Rs 10,300 crore as per the IRDA regulation and had already provided for Rs 8,300 crore (Rs 83 billion) upto the last financial. The balance would be provided this year after fresh valuation, likely to be out in the next few days," he said.
Though as per LIC's asset-liability valuation it was to create a margin of Rs 10,300 crore, IRDA had asked them to create solvency margin of additional 50 per cent of Rs 10,300 crore, Mathur said.
"We are pleading that providing additional 50 per cent margin was not fair, because we had not accounted for unquoted profit on government securities of over Rs 2,800 crore (Rs 28 billion) and had also not provided for appreciation in real estate," he said.
"Moreover, IRDA chairman had openly stated that providing for solvency margin was only a technicality for LIC," he said.
Asked about the status of their proposed launch of credit cards that would charge an extremely low interest," he said, "Talks were on with Corporation Bank, Capital One and SBI Cards (G E Capital), but nothing has been finalised."
On LIC's business target for the current fiscal, the chairman said, "We have set a target of selling 2.87 crore (28.7 million) new policies with new premium income of Rs 11,600 crore (Rs 116 billion) this fiscal as against 2.45 crore (24.5 million) policies sold last year."
"We would have gone for a more ambitious target, but for the withdrawal of single premium policies following changes in the IT Act."
LIC had collected Rs 3,000 crore (Rs 30 billion) from single premium policies last year, which was 20 per cent of the total new premium, he said.
"This year our new premium income is going to be hit by the changes brought in IT Act. Notwithstanding this loss, we are targeting for a growth of 19-20 per cent, and this does not include receipts from the Varishta Pension Yojna," he added.
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