LIC Shares Face Pressure From Adani Meltdown, Budget Life-Insurance Jolt

Life Insurance Corporation of India (LIC) shares extended their fall on Thursday following an announcement in the Union Budget around the taxability of maturity proceeds of a life insurance policy, a blow which comes at a time when Adani Group stocks have also continued to dwindle.

What Happened? Finance Minister Nirmala Sitharaman’s Union Budget proposal on Wednesday stated that the maturity proceeds of all life insurance policies that are issued after 1st April 2023 and have an annual premium of more than ₹5 Lakhs will now be taxable — effectively taking away the tax-free advantage that traditional insurance plans with an annual premium of above ₹5 lakh enjoyed earlier.

The announcement impacted the share prices of the insurance market, dealing a blow to LIC as well.

The insurance giant was also a key investor in Adani Group’s recent share sale. The Rs 20,000 crore follow-on public offering (FPO) from Adani Enterprises sailed through on its final day and was fully subscribed after high-net-worth individuals and institutional investors pooled in at a critical time.

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However, Adani Group’s board decided late on Wednesday to call off the FPO, leading to a further plunge in stock value on Thursday, in turn, affecting LIC too.

LIC, on Monday, released a public statement mentioning that its total exposure to Adani Group companies is less than 1% of its total assets under management (AUM) at book value. As of December end, LIC held 4.23% of Adani Enterprises, 9.14% of Adani Ports, 3.65% of Adani Transmission, 1.28% of Adani Green Energy, and 5.96% of Adani Total Gas.

To make matters worse, the Reserve Bank of India has now reached out to local banks requesting detailed exposure to Adani Group companies, per a Reuters report. This would include details of collateral being used to back loans and any indirect exposure banks may possibly have to the conglomerate.

Price Action: LIC’s share price was down 0.43% to ₹595.90 at mid-day.

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