How can LIC Policyholders apply for its IPO?

The LIC of India was incorporated on 1st September 1956. Since then it has come a long way to dominate the Indian life insurance space, and now has plans to list the company on the Indian stock exchanges.

The finance minister Nirmala Sitharaman announced in the budget 2020 that the government is proposing listing the Life Insurance Corporation of India. LIC is the largest insurance company in India with about 28 crore policies in force which totals to a sum assured of ₹45 lakh crores. LIC had investments valued at 30 lakh crores as on March 31, 2019.

By listing LIC on the stock exchanges, the center is aiming to achieve its disinvestment targets for the year. It is planning to raise funds up to ₹1 lakh crore through the IPO. The listing is expected by the last quarter of FY22. Upto 10% of the LIC IPO issue size will be reserved for its policyholders.

How can LIC policy holders apply for its Initial Public Offering?

The government of India, in the interest of the policyholders of LIC, has passed an amendment to the LIC Act, 1956 permitting the Corporation to make a reservation on a competitive basis, in favor of its policyholders, at any time during five years from June 30, 2021, as one of the reserved categories in any public offering that the corporation may undertake in the future.

To participate in such public offerings, policyholders will need to ensure that their PAN details are updated in the corporation’s record. Policy holders should also ensure that they have an active demat account in place.

If you have not yet updated your PAN details, it should be done at the earliest. This is important from a KYC perspective, as well as your ability to participate in the public offering of LIC.

The process of updating your PAN details with the company is as follows

  • You may visit the company website. Keep ready your policy number, PAN, date of birth, and e-mail ID, which needs to be filled while updating your PAN.
  • The records for all of your LIC policies can be updated using the above link.
  • You can also check whether your PAN is registered in your policy or not by visiting the corporation’s website.
  • You can also contact your LIC branch or agent for updating the PAN.
  • In case you do not have a PAN allotted to you, it is suggested that you should apply for it as soon as possible. Once received, please do not forget to update PAN in your records with the corporation.

If you currently do not hold a demat account, you should consider taking the following steps at your own cost:

  • Contact a Depository Participant (DP) who can assist you with the opening of a DEMAT account.
  • If your KYC by a KRA is not verified, then you need to provide the following key documents to the DP to open a demat account: A recent photograph, PAN card, Address proof, and a cancelled Cheque.
  • The respective DP might also ask for some more relevant documents based on their internal requirements.
  • The banker or the broker can also be contacted if you require any assistance in this regard.

There will be no public offering of equity shares in the United States.

Conclusion

Finally, the event we ‘all have been waiting for will be there in a few weeks, the LIC IPO! With this, the government will finally achieve its sizeable chunk of disinvestment target, and investors will be able to reap the benefits of a listed entity. Above is the process for application for LIC policy holders. All eyes are glued to this event!

By Q4 FY22, LIC would list on the exchanges. This will lead to sizeable inflows for the government. Since its listing, IRCTC has also created enormous wealth for its shareholders in tenure of just two years. Hope LIC shares do the same for its investors. But currently, all market participants are waiting for just one thing, and that is its listing!

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Vineet Nandwani

I am from a commerce background. Having completed my Bachelors of Business Administration (BBA) in 2020, I went on to pursue the Chartered Financial Analyst (CFA) course, which is a professional course in finance. The course has 3 levels, and I have appeared for my level 2 exam. Besides, I have also worked at a Wealth Management Firm in Surat, Gujarat for 2 years. I am also investing in stocks and mutual funds in my personal capacity for three years. I like to remain updated about the happenings in the financial world. Email: vineet.nandwani942@gmail.com

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