BIG LIC policy holders effect! Govt expecting this BENEFIT from 1 cr new Demat accounts to be created after LIC IPO launch

The Life Insurance Corporation of India (LIC) Policy holders, the number is around 25 crore in India, are expected to get 10% of LIC IPO, which has been reserved for them when the Initial Public Offer is launched. However, to get an IPO, one needs a Demat Account. Since all LIC Policy holders might not have a Demat Account to receive the share after launch of LIC IPO, they might go for their Demat Account opening. On this basis, the GoI is expecting around 1 crore new Demat Account opening from the LIC IPO launch. Zee Business TV reported exclusively from its sources in the Finance Ministry.

According to the Zee Business TV source in Finance Ministry, "The GoI is expecting around 1 crore new Demat Account opening from the LIC IPO launch." The source said that GoI is planning to reserve 10 per cent LIC shares for the LIC policy holders. The source went on to add that when a Government of India owned company is listed, some 10 per cent shares are kept reserved for the retail investors. On the same line the GoI is mulling to keep 10 per cent shares reserved for LIC policy holders in LIC IPO.

On what will be the benefit of these new Demat Account opening, Sumeet Bagadia, Executive Director at Choice Broking said, "One big benefits is that these 1 crore new Demat accounts will increase the percentage involvement of Indians in the stock market. If even 10 per cent of these new Demat Account holders become active post-account opening, it will help government get revenue through STT (Security Transaction Tax) on each share bought and sold in those 10 lakh Demat Accounts."

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Bagadia also said that LIC has a strong face value and trust quotient among Indians. So, apart from the 25 crore LIC policy holders, some more new Demat Account can be expected to get opened due to the LIC IPO as it's mandatory to have a Demat Account to apply for the IPO.

As per some recent media reports, the Narendra Modi Government plans to raise Rs 90,000 crore by selling six to seven per cent stake in LIC.  LIC's value is around Rs 12.85-15 lakh crore, making it India's second most valued company after Reliance Industries Limited (RIL), ahead of marquee names such as HDFC Bank, TCS, Infosys and HUL.