Banks, FIs will have to factor cross-holding norms for investing in LIC IPO

State-owned insurer is a significant investor in banks' capital, especially in public sector lenders.

Topics
LIC IPO | Banks

Abhijit Lele  |  Mumbai 


Banks and financial institutions investing in the initial public offer (IPO) of the Life Insurance Corporation of India (LIC) have to consider deduction from their capital as the state-owned company has put money in such organizations, said experts. Under Basel III norms for banks investments--like if done in LIC’s IPO--are considered reciprocal cross-holdings artificially propping up capital adequacy.

Hence, a cross-holding has to be fully knocked out from the capital base, said senior bank executives. LIC is a significant investor in banks' capital--equity, additional ...

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First Published: Sat, April 30 2022. 20:56 IST