What is an IPO ?
Full form for IPO is (Initial public offering) Whenever a private company offers its initial shares in the market for sale to the public then those shares are called IPO.
In easy language when a private company offers its shares to the public for the first time in the market then that process is referred to as IPO. Generally companies take this step when they cross the mark of $1 million.
This really helps them in raising a huge capital for the business expansion and development.
Why is the Government going for the LIC IPO ?
In the recent budget for the financial year 2021 – 22 the government has only spent and disinvested in the government holdings because they want to raise the capital for the development of the country.
They took many big decisions like – privatization of Air India, disinvestment in government holdings but the biggest one which stole the thunder of every other decision was the LIC IPO and increment in FDI from 45% to 74%.
Government took this decision because LIC is the one and only government corporation which gives the government best returns irrespective of the market situation, even during the peak of covid – 19 when the market was at its lowest point LIC was making the profit.
So, now when they want to develop the nation and raise the capital for it they introduced the LIC IPO with the increment in FDI.
Benefits of LIC IPO for policyholders.
The insurance sector will be the top sector of next decade as this decision of the government has opened many new opportunities in this unexplored field of insurance.
Following are the key benefits the policy holders will have :-
Increment in choices –
As the limitation of FDI has increased many foreign companies will jump in the indian market with new and innovative products for the customers. LIC is also preparing itself for this and according to the predictions LIC will maintain its dominance in the market like always.
Shareholding in LIC –
Now the person who will purchase a LIC policy will also get the shareholding opportunity in LIC.
Better Products –
As the competition will increase the race for customer satisfaction will also increase this will cause the improvement in existing and upcoming products in the market.
Benefits of LIC IPO for Insurance Agents or development officers.
The people working in the insurance sector can also purchase the shares of LIC and as the insurance will get cheaper their customer base will increase too.
Apart from this the scope of digitization for their business will get increased too.The selling will get easier too as the IPO will increase the benefits of customers and will decrease the price of policies.
But along with the benefits the challenges for the agents and development officers will also increase because of the introduction of new products the study material will get increased for them.
So if we conclude all of this we can say that the decision of LIC IPO in the budget of year 2021 will bring the boom in the insurance sector and insurance will be the sector of the decade.
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