LIC to have CEO and MD to Substitute Chairman

July 9, 2021

Life Insurance Corporation of India (LIC) is creating post for Managing Director (MD) and Chief Executive Officer (LIC) instead of having an Executive Chairman.

Highlights

These changes have been outlined in backdrop of launch a mega initial public offering (IPO).
LIC will have instead of an Executive Chairman on the line of public sector banking industry.
Changes were made by Department of Financial Services under Finance Ministry by amending Life Insurance Corporation of India (Employees) Pension (Amendment) Rules.
Some other rules have also been amended under LIC Act, 1956.
After amendment, LIC will now be governed by Companies Act and Sebi Act. It will also require to prepare its quarterly balance sheet with profit or loss figures.

Who will appoint CEO and MD?

Chief Executive Officer and Managing Director will be appointed by the Central Government under section 4 of the LIC Act, 1956.

LIC’s top management

Presently, LIC top management comprises of Executive Chairman and four Managing Directors. Chairman of LIC is a government of India Secretary rank officer. As the executive powers will now go to proposed MD and CEO, LIC is likely to get Non-executive Chairman. Non-executive chairman would chair the board meetings. Role and designation of four MDs of LIC is not yet clear.

Scenario in other public sector entities

Posts of Chairman and MD in nationalised banks are split. State Bank of India has an Executive Chairman and four MDs. SEBI had recently underlined that post of Chairman and Managing Director (CMD) of listed companies need to be split from April 1, 2022. SEBI is of the view that, separation of roles will reduce excessive concentration of authority in single individual.

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