LIC plans to cap its investments to save itself from exposure to Adani-like situations

LIC is under fire for investing in Adani companies.

Limited Exposure To Adani Shares

LIC has faced criticism for investing in Adani companies and wants to impose caps on equity and debt exposure to companies. The Adani group toppled, losing over $100bn in valuation after Hindenburg allegations. LIC has an exposure of over $4bn in Adani companies. LIC has $539bm AUM and is India's largest domestic institutional investor. 

Boundaries 

LIC wants to put "boundary conditions" to limit its scrips exposure. Once the LIC board approves the caps, LIC will have limited exposure. IRDAI (Insurance Regulatory and Development Authority of India) bars it from investing over 15% in debt and equity funds of any company owned by a single promoter or corporate group. 

Also ReadThis is what the experts say about buying Adani Wilmar.

Why the Boundaries?

The aim is to strengthen investment strategies and save LIC from criticism regarding its investments and exposure to Adani-like companies. The investment committee will decide on the caps before the board sees them. LIC plans to have sub-limits for its investments to keep its exposure in check. 

LIC has over Rs. 300 bn exposure in Adani companies shares and Rs. 62 bn debt exposure. The IRDAI limits allow entities to invest a sizeable amount. However, the volatile market and policyholders' fund erosion will impact its investments. 

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