Partly aided by increased overall provisioning, LIC has shown better performance on the net NPA ratio metric on its debt portfolio in 2020-21. The net NPA ratio for 2020-21 is at 0.05 percent as compared to 0.79 percent in 2019-20.

This rise in the net NPA ratio on its debt portfolio may be good news ahead of the LIC’s IPO, which may hit the market in Q4 this FY. However, the equity investment portfolio of LIC is several times the size of its debt portfolio. According to the latest LIC annual report for 2020-21, LIC had made provisions of ₹ 34,934.97 crores towards NPA and ₹2,406 crores towards standard assets on its debt portfolio of ₹4,51,303 crore, taking the overall provisioning to ₹ 37,341.60 crores for 2020-21. The Gross NPA ratio of LIC for 2020-21 stood at 7.78 percent, lower than 8.17 percent earlier. For 2020-21, the sub-standard assets in its debt portfolio stood at ₹254.37 crores, doubtful assets at ₹20,369.17 crores, and loss assets at ₹14,506.35 crores. According to the report, an amount of ₹34,934.97 crores is provided as per IRDAI guidelines in the books of accounts towards non-performing assets. Earlier this year the government had amended the Life Insurance Corporation Act, 1956, to facilitate the listing of LIC.

According to the amendment, the Central government will hold 75 percent equity in LIC for the first five years after the IPO, and then, subsequently, it will hold at least 51 percent. The government currently owns a 100 percent equity stake in LIC. According to the amended legislation, the authorized share capital of the LIC would be ₹25,000 crores distributed into 2,500 crore shares of ₹10 each. About 10 percent of the LIC IPO issue size will be reserved for policyholders.