Finance Minister Nirmala Sitharaman has firmly stated that her ministry does not influence the investment decisions of the Life Insurance Corporation of India (LIC). The clarification came in response to queries about LIC's significant exposure to the Adani Group of companies.
Ministry Clarifies Arm's Length Relationship
In a written reply presented in the Lok Sabha on Monday, Sitharaman emphasised the operational independence of the state-owned insurance behemoth. The Ministry of Finance does not issue any advisory or direction to LIC concerning the investment of its massive policyholder funds, she asserted. This statement seeks to address concerns and speculation about government influence over LIC's portfolio choices.
LIC's Investments: Following Established Protocols
The minister detailed that all investment decisions, including those related to the Adani Group, are taken by LIC alone. These decisions follow a rigorous process of strict due diligence, risk assessment, and fiduciary compliance. She highlighted that over the years, India's largest insurer has made investments across various companies based on their fundamentals and after detailed analysis.
Specifically regarding the Adani Group, Sitharaman noted that following due diligence as per established Standard Operating Procedures (SOPs), LIC has invested in shares of half a dozen listed companies from the conglomerate. The book value of these equity investments stands at a substantial Rs 38,658.85 crore. Additionally, the insurer has invested another Rs 9,625.77 crore in debt instruments issued by the Adani Group.
Governed by Regulatory Framework
Sitharaman underscored that LIC's investment activities are not arbitrary but are bound by a strong regulatory framework. Such decisions are governed by the provisions of the Insurance Act of 1938, as well as regulations issued by key financial watchdogs from time to time. These regulators include:
- The Insurance Regulatory and Development Authority of India (IRDAI)
- The Reserve Bank of India (RBI)
- The Securities and Exchange Board of India (SEBI), wherever applicable
This multi-layered oversight is designed to ensure that the investments made by LIC, which manages the savings of millions of Indians, are secure and prudent, aligning with long-term stability and returns.
