Life Insurance Corporation (LIC) did not pay any dividend to the government in the last financial year and used the free reserves to increase its paid-up capital, which has now risen to Rs 6,325 crore, the government told Rajya Sabha on Tuesday.
In 2019-20, the insurance behemoth, which is set for an initial public offer (IPO), paid Rs 2,610.75 crore as dividend to the government from profits pertaining to 2018-19.
Citing data received from LIC, minister of state for finance Bhagwat Karad said no dividend was paid in 2020-21 as the Insurance Regulatory and Development Authority of India (IRDAI) had instructed insurers to refrain from dividend payouts from profits pertaining to the financial year ending March 31, 2020.
The directive from IRDAI came in the wake of the coronavirus pandemic so that the companies could reserve capital to meet contingencies, if any.
"Government, on an application made by LIC, permitted LIC to utilise the free reserves of LIC towards increasing its paid-up capital. As a result, the paid-up capital of LIC increased to Rs 6,324.99 crore, as on December 31, 2021," Mr Karad said in a written reply.
The central government is expected to file draft papers for the mega IPO of LIC with market regulator SEBI this month. The embedded value of LIC is estimated at over Rs 5 lakh crore.