As per the two government officials, Life Insurance Corporation of India is planning to appoint a private sector professional as its first chief executive in an effort to modernise its largest insurer after a disappointing stock market debut.
First Time in 66 years, LIC to be Led by Private Sector Appointee
In its 66-year history, it will be the first time that a private sector appointee will lead India’s largest insurer, which manages 41 trillion rupees ($500.69 billion) in assets.
After that, the government will appoint a chief executive from the private sector, they said. Changes to the law that governs the LIC were made last year to enable this.
Veterans Exalt the Move
A government official, speaking under the condition of anonymity, said that “The move will lead to more choices and send good signals to shareholders”.
However, there was no light shed on where the appointee might come from.
Since listing in May last year, the insurer’s share price has taken a beating and trades 30% lower than the price at which the shares were issued, wiping off nearly 2 trillion rupees ($24.31 billion) in investor wealth.
Subhash Chandra Garg, a former finance secretary, agreed to the the idea that the pool of professionals eligible to lead the insurer be widened beyond sister, state-run firms and said that “There is absolutely no harm, this a perfectly sensible move”.
While a decision on appointing from the private sector had been made in principle, the government was considering whether further changes to the law were required and if the government could offer pay in line with the private sector, the first official said.
Notably, private firms generally pay more than the public sector. So it will be interesting to see what offer is made to the private sector appointee.
Also, it is not the first time that the government has appointed people from private sector to other state-run entities such as banks.
