In an effort to modernise the insurance behemoth LIC, the Centre is seeking a professional from the private sector as its first chief executive officer (CEO), reported Reuters. The report cited two government officials saying that it would be the first time in 66 years of LIC history that a private sector appointee will be at its helm.
One of the officials said, "The government is planning to broaden the eligibility criteria for appointment of LIC CEO so that private sector candidates can apply."
Currently, the state insurer has a chairman but that post will be scrapped when the present chairman retires at the march end and a CEO from the private sector will be appointed instead, the official said. "The move will lead to more choices and send good signals to shareholders," the government official said. Last year, changes to the law that governs the LIC were made.
"There is absolutely no harm, this is a perfectly sensible move," Subhash Chandra Garg, former finance secretary told Reuters.
The report said that although the decision to appoint from the private sector has been made in principle, the government is considering whether further changes to the law were required.
There are also concerns among the government regarding the pay differences between the private and public sectors. Private sectors tend to pay more than government firms.
LIC's share price has taken a massive hit since its listing in May last year. Shares are trading at 30 per cent lower than the issued price.
Although the firm reported a massive jump in net income in Q2 to Rs 15,952 crore. This is on the back of a 27 per cent jump in premium income and massive gains from changes in the firms accounting policy along with investment income. 40 per cent of net income came from investment profits which reached Rs 6,798.61 crore this year.
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