Mr. DK Mehrotra, the acting chairman of LIC said, "LIC reached the 10% ceiling and so we keep churning the portfolio, depending upon the market conditions. We have written to the regulator IRDA to increase the headroom,"
Guidelines put in place by the Insurance Regulatory and Development Authority (IRDR)stipulate insurance companies can invest up to 10% in a single company. For infrastructure companies, the limit is 15%.
But LIC has more flexibility than private insurance companies because the 10% limit is applied to different funds of the state-run insurer, recognising the fact that its stake in many companies has historically exceeded the limit set by the regulator, which was set up in 2000. Each fund is linked to different types of insurance products.
LIC's stake exceeds 10% in a number of blue-chip companies, including L & T, ITC, SBI, Tata Steel, M&M and ACC.
The corporation is using the downturn in the market as an opportunity to increase its equity holdings. It has an investible corpus of over Rs 2,00,000 crore, of which it plans to invest Rs 60,000 crore in equities, depending upon the market conditions.
The corporation takes a contrarian approach by buying equity when the market is down.
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