Troubling times at LIC

Investment limits prescribing prudential norms in collective investment vehicles (CIV) such as mutual funds and investment-linked insurance plans aim to ensure diversification in assets held by the CIV. The regulation is across how much of own funds can be invested in a company (10% for each scheme) and how much of the company CIV can buy (10% of paid up capital). When it was drafted, the norm on the limit of owning no more than 10% of a firm aimed at preventing investors’ money from being used to fund the owner’s business interests.

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