Friday July 31, 04:00 PM

Govt moves bill to up LIC's equity, dividend payout

NEW DELHI (Reuters) - The federal government on Friday moved a bill in parliament to raise the capital base of state-run Life Insurance Corp and enable it to pay up to 10 percent dividend to the government.

The LIC (amendment) Bill, introduced by Finance Minister Pranab Mukherjee in the lower house of parliament, proposes to raise the paid-up capital of the insurer to 1 billion rupees or more from the present 50 million rupees.

The bill also said the insurer could get sovereign guarantee for its products to the extent needed.

LIC can allocate 90 percent or more of its surplus to policy holders or keep it in a separate account, it said, adding the remaining could be paid to the government as dividend.

Earlier, junior finance minister Namo Narain Meena said the total premium income of market leader LIC grew 4.45 percent to 1.56 trillion rupees in FY09, lower than the 17.19 percent expansion seen in 2007/08.

The overall premium income of all the life insurers stood at 2.24 trillion rupees at the end of FY09, compared with 2.01 trillion rupees in the previous year, he added.

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