New Delhi: The Union Cabinet is likely to consider on Saturday a proposal seeking changes in the foreign direct investment (FDI) policy to facilitate disinvestment of the country's largest insurer LIC, sources said.
The Department for Promotion of Industry and Internal Trade (DPIIT) has mooted the proposal after taking views from the finance ministry.
"The Cabinet will take up the matter tomorrow," a source said.
According to the current FDI policy, 74 per cent foreign investment is permitted under the automatic route in the insurance sector. However, these rules do not apply to the Life Insurance Corporation of India (LIC), which is administered through a separate LIC Act.
As per Sebi rules, both FPI and FDI are permitted under public offer. However, since the LIC Act has no provision for foreign investments, there is a need to align the proposed LIC IPO with Sebi norms regarding foreign investor
participation.
The Cabinet had in July last year approved the initial public offering (IPO) of LIC and the stake sale is being planned for the current
March quarter.