Insurers may Get to Buy Over 10% Stake in Firms IRDA may remove 10% cap; move to benefit LIC that has large equity holding in many cos

The Insurance Regulatory and Developmental Authority is "actively considering" to relax the 10% ceiling on equity investments by insurers in a company, Chairman J Hari Narayan has told ET.  The move is expected to not only bring in the much-needed long-term funds into equities but also offer greater investment flexibility to LifeInsurance Corporation of India, the country's largest insurer.  "A lot of suggestions have been made in this regard and we are actively considering them," Narayan said. The finance ministry and various other arms of the government, including the Planning Commission, had raised the issue of 10% ceiling, he added.  LIC had recently come under the regulator's scanner for exceeding the investment limit in 78 companies.  When asked if the regulator was planning to allow only LIC to buy more than 10% equity in a company, Narayan said Irda "was looking at the overall investment norms for all insurers". But he did not say what would be the relaxation, if any, and when would it happen. A government official said they had sought a special dispensation for LIC since the LifeInsurance Corporation Act of 1956 allows the insurer to acquire up to 30% equity in companies after government approval.  "We have made a case. We feel that at least in case of LIC, which has a huge investible corpus, the limit should be extended," the official said requesting anonymity.  Another government official in the know of discussions said more room for LIC is needed in the current economic scenario.  Among the companies in which LIC has more than 10% equity holding are Larsen & Toubro (L&T), ITC, JSW Steel and Mahanagar Telephone Nigam Limited.  The insurer's high stakes in companies had raised concerns after it recently picked up 4.4% equity in an auction conducted by ONGC Ltd, which took its total holding in the explorer to 9.5%.  LIC plans to invest 15% of its corpus, or about . 45,000 crore, in equities in the current fiscal. It had invested nearly . 49,960 crore in 2011-12. A relaxation in investment norms will benefit government's stake sale in staterun companies as LIC has holdings in many companies lined up for disinvestment.  Cabinet to Consider FCRA Bill Today  NEW DELHI The Union Cabinet will on Thursday consider changes in a bill to give more powers to commodity markets regulator FMC and introduction of new products like options. Last week, the Cabinet had deferred the Forward Contract Regulation Act (Amendment) bill after opposition from key UPA constituent Trinamool Congress. "The bill is on the agenda of the Cabinet meeting on Thursday," a source said. Despite reservation expressed by the Trinamool Congress, the source said that the Food Ministry has not made any changes in the bill. The bill was introduced in the Lok Sabha in December 2010 and referred to the Parliamentary Standing Committee, which submitted its report on December 22, last year. The Food and Consumer Affairs Ministry has accepted most of the recommendations of the Parliamentary panel.— PTI