”These rules may be called the Foreign Exchange Management (Non-debt Instruments) (Amendment) Rules, 2022,” said a gazette notification issued recently.

The notification has inserted a paragraph in the existing policy, allowing up to 20 per cent FDI in LIC through the automatic route.

Since the foreign inflows’ ceiling for public sector banks is 20 per cent under government approval route as per the present FDI policy, it has been decided to allow foreign investment of up to 20 per cent in LIC and other such corporate bodies.

”Foreign investment in LIC shall be subject to the provisions of the Life Insurance Corporation Act, 1956, (LIC Act) as amended from time to time and such provisions of the Insurance Act, 1938, as amended from time to time, as are applicable to LIC,” it said.

Setting the stage for the country’s biggest-ever public offering, Sebi has approved the draft prospectus for sale of a 5 per cent stake by the government for an estimated Rs 63,000 crore.

According to the draft paper, LIC’s embedded value, a measure of the consolidated shareholders’ value in an insurance company, has been pegged at about Rs 5.4 lakh crore as of September 30, 2021 by international actuarial firm Milliman Advisors.

Although the DRHP does not disclose the market valuation of LIC, as per industry standards it would be about three times the embedded value or around Rs 16 lakh crore.

The LIC public issue is expected to be the biggest IPO in the history of the Indian stock market. Once listed, LIC’s market valuation will be comparable to top companies like RIL and TCS.

So far, the amount mobilised from IPO of Paytm in 2021 was the largest ever at Rs 18,300 crore, followed by Coal India (2010) at nearly Rs 15,500 crore and Reliance Power (2008) at Rs 11,700 crore.