https://www.newindianexpress.com/opinions/2021/sep/02/why-the-lic-ipo-is-not-a-good-idea-2353009.html
Why the LIC IPO is not a good idea
In a country where only around 2% of the population access the share market,
unlocking the value of a mammoth financial organisation for the purpose of
retail investors will undermine...
An excerpt
The move to disinvest LIC will severely impact the economy and vulnerable sections of the population. The objectives of nationalisation will recede into the background and LIC will have to concentrate on delivering increasing profits to the shareholders . Like private companies, it will have to target big policies that bring greater profits. In the process, the small-size policies that the poor, vulnerable and lower middle classes purchase will no longer be attractive. The social objective of providing insurance cover to the weaker sections will face a setback. The aim of expanding insurance in the unprofitable rural areas too will suffer.
As per one of the 27 proposed amendments, the Centre will hold at least 75% in LIC for the first five years after the IPO, and subsequently hold at least 51% at all times after five years of the listing. Hence, it is obvious that shares in LIC may be pared down to 51% in a span of five years . The entire edifice of LIC is built on complete trust of people. So prudence is necessary before going ahead to sell equity in it.
History and present developments bear testimony to the fact that a strong LIC is sine qua non for Atmanirbhar Bharat.
P Satish
President of LIC Employees, SCZIEF (AP, Karnataka and Telangana)
(prayaga.satish@gmail.com)
End of excerpt
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Our take on this issue:
Firstly L.I.C of India must fulfill its obligation towards us, long-suffering ex-employees who have been unjustly denied our wage revision arrears and difference in retirement dues, arising due to the wage revision since 1997. The Corporation must immediately pay us our legally rightful dues before actually listing the IPO.
We agree with the above-mentioned report that L.I.C of India must pursue its social objectives of providing affordable life insurance protection to all strata of society in India, instead of becoming a purely commercial enterprise.
We would also caution the prospective investors that they should make an informed decision, as L.I.C of India evades responsibility and doesn't provide requisite information to RTI applicants.
Though the above-mentioned report states that:
"LIC is already a transparent and efficient board-managed institution. It comes out with public disclosures every quarter. It submits reports of its functioning every month to the regulator IRDAI. It places its accounts in Parliament for scrutiny. If this is not transparent functioning, what else is?"
We beg to differ!
L.I.C of India has evaded giving statistics regarding number of ex-employees in respect of whom arrears have been repudiated, the huge amounts involved, etc. by saying that it doesn't have this data in the form of a record.
It has also not accounted for these amounts in its Balance Sheet since 1997! This proves that its records are not fully reliable and transparent.
So we would also caution the prospective investors that they should make an informed decision, as L.I.C of India evades responsibility and doesn't provide requisite information to R.T.I applicants and wants to make its ex-employees run from pillar to post and be involved in time-consuming, unnecessary and expensive litigation. It doesn't respect the esteemed Supreme Court's decisions and its own ex-employees, so how can the prospective investors expect a better treatment?
Besides, the value of shares of IPOs of the recently listed Government non-life insurance companies like New India Assurance Company Ltd. have fallen steeply, eroding investors' confidence!
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