Ahead Of IPO, LIC Improves Asset Quality

LIC has improved its asset quality ahead of the expected IPO

As insurance behemoth Life Insurance Corporation of India (LIC) prepares for its initial public offer (IPO), expected towards the end of this fiscal, the company has improved its asset quality for 2020-21.

LIC’s non-performing assets (NPAs) as on March 31, 2021 were Rs 35,129 crore out of a total portfolio size of Rs 4,51,303 crore, its annual report said.

The sub-standard assets are Rs 254.37 crore whereas the doubtful assets are Rs 20,369.17 crore and loss assets are Rs 14,506.35 crore. An amount of Rs 34,934.97 crore is provided as per IRDAI guidelines in the books of accounts towards non-performing assets, it said.

The percentage of gross NPA is 7.78 per cent while the net NPA is 0.05 per cent at the end of March 2021. This is lower than gross NPA of 8.17 per cent (as a percentage of its debt portfolio) and net NPA of 0.79 per cent in the previous year.

“The management has reviewed the asset quality and performance of investments in respect of real estate, loans, investments, other fixed assets etc and adequate provision for impairment/diminution in value of investments/assets have been provided for wherever necessary,” the annual report said.

In absolute terms, the NPA was Rs 36,694.20 crore out of a total debt of Rs 4,49,364.87 crore in 2019-20.

The corporation has made provisions to the tune of Rs 37,341.6 crore, of which Rs 34,934.97 crore is towards doubtful, sub-standard, and loss assets.

The government earlier this year amended the Life Insurance Corporation Act, 1956, to facilitate the listing of LIC.

According to the amendment, the central government will hold 75 per cent in the LIC for the first five years after the IPO and then it will subsequently hold at least 51 per cent at all times after five years of its listing. The government currently fully owns LIC.

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