Parliament on Wednesday passed the Life Insurance Corporation (Amendment) Bill that seeks to increase the company's paid-up capital to Rs.100 crore from the existing Rs.5 crore and create a separate fund for its expansion, with the Rajya Sabha approving the measure.
The new regulation replaces the 55-year-old Life Insurance Corporation Act, 1956. The bill has already been cleared by the Lok Sabha, the lower house of parliament.
Minister of State for Finance Namo Narain Meena said the government would continue to provide sovereign guarantee to the policy holders of the Life Insurance Corporation.
Meena said change in the regulation would not have any impact on the present policy holders of the LIC.
The new regulation also seeks to allow the country's largest life insurer to create a separate account to fund its expansion plans.
"A separate account will be created. LIC will have its own fund which can be used for its expansion," Meena said while replying to a debate in the Rajya Sabha, the uppar house of the parliament.
The new regulations will bring Life Insurance Corporation on par with the private insurers in terms of paid-up capital.
As per the Insurance Regulatory and Development Authority (IRDA) norms the minimum capital base of an insurance firms should be Rs.100 crore.