LIC to pump in more money into MFs

By siliconindia   |   Wednesday, 08 July 2009, 21:17 IST   |    1 Comments
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LIC to pump in more money into MFs
Bangalore: In an attempt to focus more on mutual funds (MFs), Life Insurance Corporation of India (LIC) is planning to invest about Rs 20,000 crore in MFs in the current fiscal. According to Business Standard, India's largest insurer would invest about 25,000 crore in MFs and project loans. Last year, LIC had invested a total of 20,600 crore in both these segments and this year it could be 20 percent higher. The projected investment in MFs is about eight percent more than last year's Rs 18,500 crore. Most of the insurer's corpus for MFs is likely to be invested in liquid or money market funds and fixed maturity plans (FMPs). Liquid or money market funds earn returns of 10-12 percent. The insurer, said sources, would invest money in short-term liquid funds and FMPs, where the average tenure of an investment is between two weeks and a month. It would also invest a portion in bank fixed deposits, where tenures vary between six months and a year. As the government had signaled emphasis on infrastructure projects, the source said LIC's investment in project loans would be at least 50 percent more than last year's Rs 2,100 crore. Also, insurers have been seeking relaxation in infrastructure and related equity investment norms from the Insurance and Regulatory Development Authority (IRDA).