LIC in Chang­ing Room to Buoy Lend­ing Arm

Fi­nance min­istry also di­rects the coun­try’s largest in­surer to ap­point a banker and give POS ma­chines to its agents for pre­mium col­lec­tion

The Economic Times - - Economy: Macro, Micro & More - Dheeraj.Ti­wari @times­

New Delhi: The Life In­surance Cor­po­ra­tion of In­dia, the coun­try’s largest in­surer, is work­ing on a sig­nif­i­cant makeover that will in­clude an over­haul of its lend­ing op­er­a­tions, stronger cor­po­rate gov­er­nance frame­work and a more mod­ern sales force equipped to re­ceive dig­i­tal pay­ments.

A se­nior gov­ern­ment of­fi­cial told ET that the in­surer will soon ap­point a banker to over­see its lend­ing op­er­a­tions.

A stan­dard op­er­at­ing pro­ce­dure has also been worked out for re­pay­ment through one-time set­tle­ment scheme, or OTS.

At the end of March 2016, LIC had a debt port­fo­lio of ₹ 3.79 lakh crore, big­ger than the loan port­fo­lios of most banks. Its gross non- per­form­ing as­sets stood at 3.76% at the end of March 2016, up from 3.30% a year ear­lier. “We have taken some de­ci­sions to stream­line the over­all process. Prefer­ably, a re­tired banker will be ap­pointed to help the board in ad­vis­ing on the lend­ing port­fo­lio. Un­der the new lead­er­ship, LIC is mak­ing ef­forts to im­prove cor­po­rate gov­er­nance,” the gov­ern­ment of­fi­cial said.

Bring­ing ex­per­tise from the bank­ing sec­tor is ex­pected to strengthen the in­surer’s lend­ing op­er­a­tions that in­volve of­fer­ing loans to cor­po­rates.

The fi­nance min­istry has also nudged the in­surer to give POS ma­chines to its 20 lakh agents for pre­mium col­lec­tion. To start with, LIC is ex­pected to give the ma­chines to about 2 lakh agents.

“This is in sync with the gov­ern­ment’s aim of strength­en­ing digi- tal pay­ment in­fra­struc­ture. The in­surer will also set up a cy­ber se­cu­rity cell to mon­i­tor any de­vi­a­tion,” the of­fi­cial said. Around 90% of LIC’s pre­mium is col­lected through its agents.

An email sent to LIC did not elicit any re­sponse till the time of fil­ing this story. The com­pany on Mon­day re­ported 12.81% year on year growth in its to­tal as­sets at ₹ 24.41 lakh crore at the end of De­cem­ber 2016. It recorded 12.43% rise in to­tal pre­mium in­come at ₹ 1.45 lakh crore dur­ing the nine months ended De­cem­ber 2016.

In the past year, cor­po­rate gover- nance is­sues have haunted In­dia’s largest in­surer. The fi­nance min­istry had ini­ti­ated a de­part­men­tal en­quiry against its for­mer chair­man SK Roy, al­legedly over in­vest­ments made by LIC in real es­tate firm Unitech in 2008-09.

Roy un­ex­pect­edly re­signed in June, two years be­fore the end of his term. He later re­quested the gov­ern­ment to re­lieve him un­der the vol­un­tary re­tire­ment scheme af­ter re­al­is­ing that he stands to lose ben­e­fits in­clud­ing pen­sion and other emol­u­ments if he quit.

In 2011, the then chair­man TS Vi­jayan was de­moted as manag­ing di­rec­tor amid al­le­ga­tions of ir­reg­u­lar­i­ties. Af­ter be­ing ex­on­er­ated by the Cen­tral Bureau of In­ves­ti­ga­tion (CBI) he was made head of In­dia’s in­surance reg­u­la­tor.

In 2016, the gov­ern­ment ap­pointed VK Sharma, an old guard at the in­surer, as its chair­man.

“LIC is also a big in­sti­tu­tional in­vestor. It is para­mount that they have set pro­ce­dures. There were some is­sues which have now been ad­dressed. The new chair­man has been proac­tive in his ap­proach,” said a fi­nance min­istry of­fi­cial, who did not wish to be quoted.

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