Life Insurance Corporation (LIC) of India earned Rs. 11,000 crore profit in financial year 2015-2016 from stock market investments. The information was revealed by a senior official of the state-run life insurer Thursday, PTI reported.
"We saw some profit booking opportunities during the fiscal and have made a profit of Rs. 11,000 crore through our equity investments in the recently concluded FY16," Pravin Kutumbe, LIC executive director for investment operations, said at a press conference in Mumbai.
LIC, also India's largest domestic institutional investor (DII), deployed Rs. 65,000 crore in the stock markets during the year, more than its target of Rs. 60,000 crore, he added.
Kutumbe told reporters that the banking sector, burdened by bad loans and consequently low profit, offered a good investment opportunity.
The gains need to be seen in the context of benchmark indices Sensex and Nifty falling about nine percent in financial year 2015-2016.
LIC often comes to the rescue of the government when stake sale in public sector undertakings (PSUs) evokes a lukewarm response. In the past six years, about 37 percent of stake sale proceedings have come from LIC, according to a BusinessLine report.
The daily said that between 2011-2012 and 2015-2016, LIC bought shares worth at least Rs. 36,866 crore, constituting about 37 percent of the Rs. 97,620 crore the Indian government raised through disinvestment.
The statistics prompted an analyst to say that this was the not the best way of divesting public sector assets. "This is not the best route for disinvestment. Sale of shares can be done to LIC through a private deal also, why does the government have to do a public offer," said Prithvi Haldea, founder and chairman of Prime Database, the BusinessLine reported.
Besides participating in the disinvestment process, LIC also directly acquires stakes in state-run enterprises.