LIC’s bad-asset provisioning rose 30% to Rs23,760 cr in FY19
30 Dec 2019
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Weighed down by a string of acquisitions of failed government companies and soured investment decisions, state-owned Life Insurance Corp of India (LIC) has raised provisioning for doubtful assets by 30 per cent to Rs 23,760 crore for the year ended 31 March 2019.
The country’s largest life insurer has exposure to stressed entities such as Dewan Housing Finance Corp Ltd, Infrastructure Leasing and Financial Services and the Anil Ambani-led Reliance Group among others.
In its recently-released annual report, LIC said it has been reviewing asset quality and the performance of investments in real estate, loans and other assets.
LIC had made a provisioning of Rs18,195 crore for FY19 on the back of a reduction in gross nonperforming assets (NPAs) to 6.15 per cent from 6.23 per cent in FY18. Net NPAs of LIC, however, declined to 0.27 per cent in FY19 from 1.82 per cent in FY18.
LIC had NPAs worth Rs24,777 crore, doubtful assets of Rs16,690 crore, as of 31 March 2019, against total credit of Rs4,00,000 crore. This consisted of lost assets worth Rs6,772 crore and substandard assets Rs1,312 crore.
Total loan assets for restructuring rose to Rs401 crore from nil, due to LIC’s exposure to some large power and infrastructure assets.
LIC saw a 10 per cent increase in valuation surplus of Rs53,214.41 crore in FY19. It has a market share of 76.28 per cent in number of policies and 71 per cent in first-year premiums. It paid a dividend of Rs2,610.74 crore to the government for FY19.
"During the Financial Year 2018-2019, LIC generated a valuation surplus of Rs 53,214.41 crore, registering a growth of 9.9% over the previous year. It has a market share of 76.28% in number of policies and 71% in First year Premium as on 30.11.2019," the finance ministry said in a tweet.
LIC Chairman M R Kumar handed over the cheque to Finance Minister Nirmala Sitharaman in presence of Finance Secretary Rajiv Kumar and Special Secretary Debasish Panda.
"Union Finance Minister Smt. @nsitharaman receives a cheque of Rs 2,610.74 Crores from Shri MR Kumar, Chairman of LIC, as Government's share of surplus for Financial Year 2018-2019 here today. Shri Rajeev Kumar, Finance Secretary, was also present," the ministry said.
LIC saw its yield on investments fall to 7.59 per cent in FY19 from 7.71 per cent in the previous year. According to the annual report, investments in loans, debentures, equity and various social and infrastructure projects, money market instruments stood at Rs29.84 lakh crore.
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