Will LIC Of India become a Bank rather than remaining only an Insurance Company?

Yes .. LIC Board is to decide. If Private players and NBFCs may be invited ... why not LIC Housing Finance pray for a Banking licence ? And .. that will be a better option for the prospective clients.

But ... questions lie elsewhere :-

---  Banking and Insurance are two different things. Risk cover for lives require a good capital base. May not banking business erode LIC's capital base ?

---  LIC has no experience in lending and in "Priority Sector Lendings" ( a must ) - they have not seen things like NPA

---  May LIC handle NPA and its management ( LIC agents might be taught what is NPA )

---  In India, (generally) agents are not allowed to handle Banking businesses, no intermediaries allowed, no gift allowed, no commission allowed - even then may LIC use their agents for a otherwise dull business called Banking ?

---  We have seen the fate of AIG - insurance and banking was mixed up

---  May LIC Act permit such new business ?

---  Who will control LIC - RBI or IRDA ? ( our respected FM - only the other day U was advocating 'mergers and amalgamation of Banks in India - have U abandoned such a proposal ? )

A few years ago LIC's management had made it very clear that it will not foray into the banking sector and in order to facilitate the cash management on daily basis and other related services all over india, LIC has a 26% stake in Corporation Bank.

LIC is already having a major and controlling share in some of the banks. If it had any plans of entering into banking sector it will not buy a major stake in the already existing banks. And it is better for LIC to stick to life insurance business only as the insurance industry has hottedup with severe competition and the dwindling market share necessitates LIC to stick and concentrate on its prime business. And most of the companies floated by LIC are before opening up the insurance industry. And as there was no threat to its main business it could go ahead with its subsidiaries. But now it is better for LIC to stick to its prime business.

Dear Meena

I truly agree with you that LIC should stick to insurance sector only & reinvest the  surplus deposits in development projects either in private sector or govt sector.It  should not think for switch over to the banking sector .

Lic must stick to its life insurance as if it moves towards banking its need to various ratios as well as various regulatory norms will hinder him to open into banking norms, just for shake of additional busin ess by way of banka partner, its already have tie up with many to explore same.

 LIC should stick to its core area of expertise that is Insurance. Moving into banking space is a different ball game , 2 different regulators are involved, while Bankassurance as a channel to explore for sales is great, we don't want a scenario when Insurance becomes a small department of a Bank. Like a credit card division, that is a scary scenario.

i agree with Niranjan and Devranjan here, LIC should solely concentrate on Insurance and should not enter into banking, as there will surely be clash of interest, and LIC if goes with banking there are so many things that goes into banking with the reverse repo rates, and with Government of India having the High stakes in LIC will get affected, so LIC should solely concentrate on Insurance and leave banking to others.

LIC will remain a dominant Life Insurance player.

The reason is that once it becomes a bank it will be goverend by banking regulations of CRR, NAV, Repo, Reverse Repo and a host of acronyms, while being a Insurer it is goverend by a set of rules which altough stringent but allow LIC a lot of leeway.

By converting it into bank, GOI the major stake holder in LIC will have difficulties in routing money to it infrastructre projects as well as for stabilising the markets as the need arises.

More importantly having a wide array products does not necessarily warrant that LIC will become a banking entity one day.

Hi,

It is good though but if you seen the last one decade trends in financial inclusion and exclusion in our indian capital market are equity, debt and g-sec by way of capitalization in the Banking, Finance, Investment, Insurance companies in entire BFSI segment as a whole by Public / Private / Foregin Banks, AIMI, IRDA & NBFC to provide the wealthsurance managed by AIFI out of which one are the LIC as majority stage of all the companies in these sector because our economy in very competative edge of Liberalization, Privatization, Globalization in an around the world economy environment,

In the nutshell, not only LIC any one desire to tape the sector of retail customer and banking is the way of each individuals go to visit any of the branches in any bank because of that all the BFSI products and services right now sales and services by all the banks then why insurance can not do the banking segment but require to meet the satisfactory expecations of the customer unless and untill the consumer is the king of any segement to the success of any organization in any sector.

In the queue of competation LIC is also tape the indian capital market by way of housing loan segment, investment in equity, debt and g-sec as well holding in the equity sharing holding of many FIIs, AIFI and Banks right now and have more liquidity and earning of good interest income and meet his NII / NIM and opportunity are again and again more to grab the market segment in BFSI.