Will LIC IPO benefit the existing policyholders?

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LIC IPO is expected to indirectly benefit the policyholders by boosting LIC's operational efficiency with its listing. It is also speculated that the IPO may be launched with a reserved quota for policyholders.

With the listing of LIC, LIC would come under direct SEBI scanner and would be required to adhere to the listing requirements. This would enhance transparency in its operation and strengthen overall corporate governance within LIC.

Since the announcement of LIC IPO, it has created fear in the minds of policyholders to lose the sovereign guarantee offered by LIC. However, the Finance Minister has assured that the interest of policyholders will be protected as LIC will retain its sovereign guarantee.

Having said so, it is also expected that the LIC Act 1956 will require amendments before the launch of IPO in terms of dividend distribution amongst other things. Thus, we need to wait for the outcome to see if the change in Act would have any impact on the policyholders.