A fully government-owned organization, LIC was
created in 1956 by nationalizing 245 Indian as well as
foreign companies. The luminaries who spearheaded
this move at that time visualized an entity that will provide life
insurance to Indians, especially the vast rural masses, at an
economical cost and channel the savings for the betterment of
the nation. Since its inception, LIC has worked resolutely
towards spreading life insurance and in the process, it has built
a wide network across the length and breadth of the country
consisting of 2,048 branches, 101 divisional offices, 7 zonal
offices and a corporate office.
The number of new policies marketed grew each year
from 14.69 lakhs in 1961 to 2.18 crores in 2004-05 and the sum
assured under this business rose to a high of Rs. 1,79,886.66 cr
in 2004-05 from Rs. 336.67 cr in 1957. The total funds of the
Corporation also grew from Rs. 702.80 cr in 1961 to
Rs. 4,16,910.36 cr in 2004-05. Investments, which were
Rs. 329.74 cr in 1957 rose to a high of Rs. 4,13,800.95 cr in
2004-05, all of which gets deployed for the development of the
nation. The LIC has huge investible funds and the main source
comes from the premiums collected from the policyholders.
The Corporation invests these funds in various states,
industries and also in various other countries. The LIC, while
investing its funds, has to consider various factors and forces
such as safety, liquidity and productivity of funds plus variousother regulatory bindings in terms of investment norms, asset-liability management, etc. In short, the
LIC has to make its investments within the ambit of these bindings. As a result, the Corporation is not
in a position to pursue a prudent investment policy due to which its investment income may come
under pressure. Adding fuel to the fire, the falling interest rates would also adversely affect the
investment performance of the Corporation. |
