The country’s largest insurer, Life Insurance Corporation of India (LIC), has earmarked around Rs 25,000 crore for investing in mutual funds (MFs) and project loans for 2009-10.
Sources close to the development told Business Standard that the state-owned insurer would invest about Rs 20,000 crore in MFs and disburse project loans worth Rs 3,000-5,000 crore. The investment under these two heads could be up to 20 per cent higher than last year’s Rs 20,600 crore.
The projected investment in MFs is about 8 per cent more than last year’s Rs 18,500 crore. Most of the insurer’s corpus for MFs is likely to be parked in liquid or money market funds and fixed maturity plans (FMPs). Liquid or money market funds earn returns of 10-12 per cent. The insurer, said sources, would park money in short-term liquid funds and FMPs, where the average tenure of an investment is between two weeks and a month. It would also invest a portion in bank fixed deposits, where tenures vary between six months and a year.
As the government had signaled emphasis on infrastructure projects, the source said LIC’s investment in project loans would be at least 50 per cent more than last year’s Rs 2,100 crore.
“Project loans give returns of 13-14 per cent as compared with about 12 per cent returns from non-convertible debentures. This year, demand for project and corporate loans is poised to be more than last year and hence the returns will be more,” said an LIC executive.
Also, insurers have been seeking relaxation in infrastructure and related equity investment norms from the Insurance and Regulatory Development Authority (Irda). “Irda may consider relaxing investment norms for infrastructure projects as most of these investments are long term,” said the source.
Source: Business Standard
Sources close to the development told Business Standard that the state-owned insurer would invest about Rs 20,000 crore in MFs and disburse project loans worth Rs 3,000-5,000 crore. The investment under these two heads could be up to 20 per cent higher than last year’s Rs 20,600 crore.
The projected investment in MFs is about 8 per cent more than last year’s Rs 18,500 crore. Most of the insurer’s corpus for MFs is likely to be parked in liquid or money market funds and fixed maturity plans (FMPs). Liquid or money market funds earn returns of 10-12 per cent. The insurer, said sources, would park money in short-term liquid funds and FMPs, where the average tenure of an investment is between two weeks and a month. It would also invest a portion in bank fixed deposits, where tenures vary between six months and a year.
As the government had signaled emphasis on infrastructure projects, the source said LIC’s investment in project loans would be at least 50 per cent more than last year’s Rs 2,100 crore.
“Project loans give returns of 13-14 per cent as compared with about 12 per cent returns from non-convertible debentures. This year, demand for project and corporate loans is poised to be more than last year and hence the returns will be more,” said an LIC executive.
Also, insurers have been seeking relaxation in infrastructure and related equity investment norms from the Insurance and Regulatory Development Authority (Irda). “Irda may consider relaxing investment norms for infrastructure projects as most of these investments are long term,” said the source.
Source: Business Standard
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