Insurance behemoth Life Insurance Corporation of India (LIC) has announced a discount for its policyholders in the upcoming IPO, which is likely to be launched by March-end.
Confirming the discount in its Draft Red Herring prospectus, submitted to the Market regulator Sebi on February 13, 2022, the life insurer stated, "the aggregate of reservations for the eligible policyholder(s) shall not exceed 10 percent of the offer size."
While it is established that the policyholders of LIC can bid for its IPO at a discounted price, the quantum of the discount has not yet been disclosed/
LIC is the largest insurance company in India with a market share and has nearly 29 crore policyholders. This is the first time policyholders are getting such a reservation in any public issue.
Those who hold one or more life insurance policies with LIC will be able to apply under the reserved portion.
Let's now look at some basic FAQs regarding the same.
What are the minimum and maximum amount eligible policyholders can bid for?
While the minimum amount is undecided and will likely come out when the issue's price band is announced, one can bid for a maximum of ₹2 lakh under LIC IPO policyholders’ quota.
Eligibility
To be eligible for bidding for the IPO under the policyholder quota, one must update PAN details with life insurance policies by February 28, 2022. LIC policyholders need two things to apply for the upcoming LIC IPO 1) PAN details must be linked with insurance 2) a Demat account.
Also, to be eligible for reservation under the Policyholder Reservation Portion category, the policy should have been issued on or before the date of this Draft Red Herring Prospectus.
How can LIC Policyholders link their PAN card with their insurance?
1. First, visit the official LIC website
2. Select the Online PAN Registration option on the home page and click Proceed
3. Provide your ID details like LIC policy number, mobile number and email address. It is very important to provide all these details carefully and correctly and click on save.
4. Fill in Captcha.
5. Enter the OTP sent on your mobile number and click on submit.
Is there any lock-in period for shares purchased through this quota?
No. The policyholders can sell the equity shares on listing if they want.
Can policyholders of other private insurers bid under this quota?
No. you have to hold one or more life insurance policies with LIC, will be able to apply under the reserved portion.
Will the investment in LIC shares qualify for tax exemption?
No, investment in equity shares will not qualify for tax exemption, as per income tax rules.
In the case of a joint life policy, will both the policyholders be eligible for reservation or not?
No. In that scenario, only one of the policyholders can bid under the reserved category. The PAN of the policyholder going to bid has to be updated in the insurance also, he/she must have a demat account to bid.
If my policy has lapsed condition. Can I still bid under the Policyholder Reservation Portion?
All policies that have not exited our records by way of maturity, surrender, or death of the policyholder are eligible for reservation under the Policyholder Reservation Portion.
Can the spouse of a deceased policyholder under an annuity policy and currently receiving annuities apply under this quota?
No, only the policyholder and not a beneficiary can apply under the reserved quota.
Is the allotment to the eligible policyholder(s) guaranteed under Policyholder Reservation Portion?
No, the allotment is not guaranteed.
Can a nominee bid under this portion?
No, only the eligible policyholder(s) is eligible to bid under the Policyholder Reservation Portion.
Can NRI policyholders or other policyholders residing out of India apply to the offer?
No, only resident Indians can apply.
