Life Insurance Corporation (LIC) Chairman MR Kumar has announced that Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) subscribers are eligible for a discounted LIC IPO. “PMJJBY is part of that and reservation will be there (for the policyholders),” Kumar said, interacting with the media.
According to the draft red herring prospectus recently submitted by LIC to market regulator SEBI, 10 percent of the total offering of LIC shares will be reserved for the LIC policyholders. There is also speculation about discounts. However, the LIC has not yet announced plans to offer policyholders discounts at the proposed initial public offering (IPO).
LIC IPO: What is PMJJBY?
The PMJJBY is an insurance scheme launched by the Prime Minister for people between the ages of 18 and 50. Launched in 2015, PMJJBY offers a one-year renewable life insurance policy of Rs 2 lakh to all savings bank account holders, covering death from any cause, at a premium of Rs 330 per annum per subscriber. This government scheme is offered or implemented via the LIC. According to the draft Red Herring Prospectus (DRHP) submitted last week, the maximum bid amount under the Policyholder’s Reservation portion by an eligible policyholder would not exceed Rs 2,000,000 (net of the policyholder’s discount).
LIC IPO: how to apply?
LIC policyholders who have one or more policies as of the date of the DRHP and the opening date of the bid/offer and who are residents of India are eligible to apply under the ‘policyholder reservation portion’ category. They will have to ensure that PAN data is updated in the company’s policy records by February 28th. A policyholder can only submit an application from his own demat account. In fact, NRI policyholders or other policyholders residing outside of India cannot take advantage of this offer in this category.
LIC IPO: IDBI interest
The state-run life insurer may not sell its entire stake in IDBI Bank and may use its large network of branches to market its insurance services, Kumar further said. The majority stake in IDBI Bank, which it bailed out in 2019, is seen as a risk to the balance sheet.
“I would like to have a share in IDBI Bank. It has made the biggest contribution to the bancassurance channel for us. This will help us grow that part of the channel,” Kumar said in a news conference with reporters on Monday.
The Indian government and LIC own more than 90 percent of IDBI Bank, which at the end of December had assets of more than rupees 2,900 billion ($38.91 billion) and more than 1,800 branches across the country. LIC took over the lender when it suffered from bad loans and needed a new capital injection.
LIC issued approximately 21 million individual policies in FY 2021, accounting for nearly 75 percent of new individual policy issuances. The IPO is an offer for sale (OFS) by the Government of India. There is no new issuance of shares by LIC.
The government has a 100 percent stake or more than 632.49 crore shares in LIC. The par value of shares is Rs 10 each. The public issuance of LIC would be the largest IPO in the history of the Indian stock market.
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