INSURANCE COMPANIES
AND THERE POLICIES IN INDIA
Investment companies help the small
savers get the benefit of investment in high growth corporate securities by
pooling their savings and investing the same in a professional way, these investment
companies raise funds through issue of shares and debentures accepting fixed
deposits issuing certificates of cash etc. INVESTMENT POLICIES
As per
section 27 (B) of the Insurance Act.1938 and, government guidelines issued time
to time 70% of annual accretion to investible fund was to be invested in
socially oriented sectors until recently. That is only 30% can be invested in
market securities. Nevertheless, from 1 st July 1995 the government required
the GIC to invest upto 55% in market securities. That is, investment limit in
social sector is reduced to 45%of fund accretion. The break-up of 45% social
sector investment is at least 20% of accretion fund in central government
scrips; 10% in state government scrips and balance 15% in housing loans to
state and HUDCO.
LIFE INSURANCE CORPORATION OF INDIA
LIC was established by an Act of parliament, Life Insurance Corporation of India Act, 1956. It took over 244 private life insurance business companies then existing. A board of directors consisting not more than 15 members, all appointed by the Government of India (GOI) manages LIC. 2 managing directors generally assist the chief executive, the chairperson appointed by the GOI. An Executive committee to advise the Board on general superintendence and direction and an Investment committee to advise in the matter of deployment of funds are established by the Board. It is a wholly government owned organization with an initial capital of Rs.5 Crs. Contributed by the GOI.
LIC SUBSIDIARIES
LIC has been actively involving itself in the promotion of new development financing institutions in collaboration with other institutions. It provides resource support to other institutions by subscribing to their initial and subsequent offers of shares and debentures. It has subscribed to shares and bonds of IDBI, IFCI, ICICI, IRBI, SIDBI, EXIM BANK, NHB, REC, etc.
GIC was established in 1973 with four subsidiaries, viz., National Insurance Co. Ltd., New India Assurance Co. Ltd., Oriental Insurance Co. Ltd, and United India Assurance Co. Ltd Earlier the government of India took over 108 insurance companies. Later these were reorganized on regional basis, with GIC as the holding company of the 4 subsidiaries. Now, these subsidiaries compete with each other.