Ahead of its proposed initial public offering (IPO), insurance giant LIC improved the quality of its assets for the fiscal year ended March 2021.
Non-performing assets (NPA) as of March 31, 2021 amount to Rs 35,129.89 crore out of a total portfolio of Rs 4,51,303.30 crore, according to the latest annual report of the Life Insurance Corporation of India (LIC ).
Substandard assets are Rs 254.37 crore while doubtful assets are Rs 20,369.17 and loss assets are Rs 14,506.35 crore. An amount of Rs 34,934. 97 crore is provided in accordance with IRDAI guidelines in the books of account for non-performing assets, he said.
The percentage of gross NPA is 7.78% while the net NPA is 0.05% at the end of March 2021. This is lower than the gross NPA of 8.17% (as a percentage of its debt portfolio) and with a net NPA of 0.79%. the previous year.
In absolute terms, the NPA was Rs 36,694.20 crore on a total debt of Rs 4,49,364.87 crore in 2019-2020. The stress threshold for banks is different from that for insurers. LIC usually makes full provisions for all NPAs in the debt ledger.
The company has made provisions to the tune of Rs 37,341.6 crore, including Rs 34,934.97 crore for doubtful, substandard assets and losses.
“Management has reviewed the quality of assets and performance of investments with respect to real estate, loans, investments, other fixed assets, etc. and an adequate provision for depreciation / decrease in value of investments / assets has been scheduled whenever necessary “, reports the annual report. noted.
Earlier this year, the government amended the Life Insurance Corporation Act, 1956, to make it easier to register LICs.
According to the amendment, the central government will own 75 percent of the LIC for the first five years after the IPO, and then it will own at least 51 percent at any time after five years of listing. The government currently owns a 100 percent stake in LIC.
The authorized share capital of LIC will be Rs 25,000 crore divided into Rs 2,500 crore shares of Rs 10 each, in accordance with the amended legislation. Up to 10 percent of the issue size of LIC’s IPO will be reserved for policyholders.
In the budget speech, Finance Minister Nirmala Sitharaman said that the IPO of LIC would be launched in the current fiscal year.
LIC, once listed, has the potential to become one of the largest domestic companies in terms of market capitalization with an estimated valuation of Rs 8-10 lakh crore.
Regarding the IPO of LIC and the strategic sale of BPCL, Sitharaman recently said, “We are making progress with all of them… the details take a long time. Settling details between different departments is consuming its own time and it is accelerating, she added.