As public sector banks came under stress of rising bad loans, the Life Insurance Corporation — the largest investor in PSBs — joined other investors in selling its holding in them over the last six months.
According to the data collated by Prime Database, while the aggregate shareholding of LIC in 23 PSBs went up from 8.41 per cent in June 2014 to an all time high of 11.63 per cent in June 2015, the shareholding has reduced since then. At the end of December 2015, LIC’s aggregate shareholding in these bank’s declined to 11.01 per cent.
As the share prices of these banks came under pressure, Life Insurance Corporation – which is also the biggest investor in these banks – saw a sharp decline in the market value of its holding in these banks and it hit a four-year low.
The market value of LIC holdings in the 23 banks declined 30 per cent from Rs 38,373 crore in December 2015 to a four-year low of Rs 26,837 crore.
As far as reduction in shareholding is concerned, 13 state-owned banks saw LIC reduce in holdings in the period between July 2015 and December 2015. While five of them saw a marginal increase in LIC’s holding within them, the remaining five banks in the list saw no change.
Indian Overseas Bank witnessed the biggest decline in LIC holding as it went down from 14.21 per cent in June 2015 to 10.2 per cent in December 2015.
Bank of India and Punjab National Bank followed as LIC reduced its holding in the two banks by 2.39 percentage points and 1.52 percentage points.
LIC even reduced its holding in State Bank of India during the period as its holding came down from 11.51 per cent in June 2015 to 11.27 per cent in December 2015.
Earlier in the period between June 2014 and June 2015, the public sector insurer significantly increased its holding in six public sector banks (even as their NPAs figure among the highest).
The list comprised — United Bank of India, Canara Bank, Bank of Maharashtra, Central Bank of India, Uco Bank and Punjab & Sind Bank — and LIC increased its holding in them in the range of 6.28 to 9.4 percentage points.
However, even as public sector banks witnessed a decline in their share prices and LIC reduced its holding in them, Pranav Haldea, managing director, Prime Database said that LIC seemed to have maintained the market value of its portfolio.
“The market value of LIC portfolio across 291 NSE-listed companies where its holding is more than 1 per cent, stood at Rs. 4.15 lakh crore at end of December 2015 quarter. This was almost similar to its holding is September 2015 quarter (Rs. 4.13 lakh crore) as also its holding one year back viz. December 2014 quarter (Rs. 4.18 lakh crore),” he said.