LIC's total assets (Rs 12 lakh crore) almost match the amount the Railways are going to spend on infrastructure over the next 10 years. But why was the infrastructure industry watching closely as Dinesh Kumar Mehrotra was appoÂinted Interim Chairman of Life Insurance Corporation of India (LIC)?
Because the LIC-IDFC infra bonds, launched with much fanfare last year, may be further delayed as 'modalities are being worked out'. As a tax saver for individuals, the bond has an investment limit of Rs 20,000 under Section 80CCF of the Income Tax Act, over and above the maximum investment of Rs 1 lakh. In reality, though, the Insurance Regulatory and development Authority (IRDA) had expressed concerns over insurance companies getting into the long term infrastructure pie.
IRDA Chairman J Hari Narayan had expressed that “As a regulator, we have certain concerns with regard to insurance companies issuing infrastructure bonds. I think there should be certain curbs on such issues by insurance companies”
Meanwhile, Rural Electrification Corporation (REC) is planning to raise Rs 1,000-1,500 crore in a private placement issue with LIC. The bonds have tenures of five and ten years, respectively, and the interest rates are yet to be determined.
Mehrotra, who joined LIC as a direct recruit in 1977, was Executive Director for International Operations before becoming a Managing Director in July 2005.
He was also a contender for the chairman's post in 2006. The three other Managing Directors of LIC are TS Vijayan, Thomas Mathew and AK Dasgupta. There was much uncertainty in the air before Mehrotra was chosen to be the Interim Chairman.