Life Insurance Corp of India (LIC), in its latest data, has revealed that its gross non-performing asset (NPA) ratio in the debt portfolio has jumped to 8.17 per cent as of March 2020 compared to 6.15 per cent as of March 2019. The total rise in net NPA ratio stood at 0.79 per cent in FY20 vs 0.27 per cent in FY19.
The fully-owned government entity's balance sheet also rose to Rs 31.24 lakh crore in FY20 compared to Rs 30.56 lakh crore in FY19. The company's exposure in real estate and loans rose to 4.22 per cent in FY20 from 4.09 per cent earlier.
The company extended total loans worth Rs 1.08 lakh crore in FY20 vs Rs 1.04 lakh crore a year before. LIC's total loan disbursal stood at Rs 98,894.63 crore vs Rs 2,087.54 crore in FY19. The company did not disclose investments that have been downgraded for the March quarter.
LIC, however, has made provisions worth Rs 12,561.37 crore for debts that have turned into NPAs or are predicted to turn into bad loans. For non-standard loans, LIC has made provisions worth Rs 12,131.22 crore in FY20.
The weakening financials coupled with rising NPAs and issues such as increasing exposure in sectors badly hit by the pandemic could pose hurdles in the government's plan to sell around 10 per cent stake in the insurance behemoth via a share sale.
The Centre aims to list LIC on the domestic bourses in the January-March quarter of the current financial year. However, most of the government's divestment plans, including Air India, BPCL, etc, have been put on the back foot due to the coronavirus pandemic. With the IPO of LIC, the Centre aims to achieve around Rs 2.10 lakh of its budgeted disinvestment target.
The Finance Ministry has already invited bids from consulting firms, investment bankers, and other financial institutions to advise it on LIC's proposed IPO. If the government can divest the stake in the company, it'll help the Centre compensate for the ballooning fiscal deficit.
Meanwhile, LIC has acquired close to 5 per cent shareholding in the bank by purchasing shares from the open market. With the fresh acquisition, the hold of LIC has increased from 0.75 per cent to 4.98 per cent, Yes Bank said in a regulatory filing.