Ahead of IPO, LIC lowers net NPA to 0.05%, improves asset quality

Ahead of its proposed initial public offering (IPO), insurance behemoth has improved its asset quality for the financial year ended March 2021.

The non-performing assets (NPAs) as of March 31, 2021, are Rs 35,129.89 crore out of a total portfolio of Rs 4,51,303.30 crore, according to the latest Annual Report of Life Insurance Corporation of India (LIC).

The sub-standard assets are Rs 254.37 crore whereas the doubtful assets are Rs 20,369.17 crore and loss assets are Rs 14,506.35 crore. An amount of Rs 34,934.97 crore is provided as per IRDAI guidelines in the books of accounts towards non-performing assets, it said.

The percentage of gross is 7.78 per cent while the net is 0.05 per cent at the end of March 2021. This is lower than gross of 8.17 per cent (as a percentage of its debt portfolio) and net NPA of 0.79 per cent in the previous year.

In absolute terms, the NPA was Rs 36,694.20 crore out of a total debt of Rs 4,49,364.87 crore in 2019-20. Stress threshold for banks is different from that for insurers. usually makes full provisions for all NPA in the debt book.

The corporation has made provisions to the tune of Rs 37,341.6 crore, of which Rs 34,934.97 crore is towards doubtful, sub-standard, and loss assets.

“The management has reviewed the asset quality and performance of investments in respect of real estate, loans, investments, other fixed assets etc and adequate provision for impairment/diminution in value of investments/assets have been provided for wherever necessary,” the annual report said.

The government earlier this year amended the Life Insurance Corporation Act, 1956, to facilitate the listing of

According to the amendment, the central government will hold 75 per cent in the LIC for the first five years after the and then it will subsequently hold at least 51 per cent at all times after five years of its listing. The government currently owns a 100 per cent stake in LIC.

The authorised share capital of the LIC shall be Rs 25,000 crore divided into 2,500 crore shares of Rs 10 each, as per the amended legislation. As much as 10 per cent of the LIC issue size will be reserved for policyholders.

Finance Minister Nirmala Sitharaman in the Budget speech had said the of the LIC would be launched in the current financial year.

LIC, once listed, has the potential to become one of the biggest domestic by market capitalization with an estimated valuation of Rs 8-10 lakh crore.

On LIC IPO and strategic sale of BPCL, Sitharaman recently said, “We are progressing with each one of them…the detailing requires a lot of time.”

The tying up of loose ends among different departments consumes its own time and this is being expedited, she added.

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.

We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

Source link

Leave a Reply

Your email address will not be published. Required fields are marked *