Concentration Risks

Recently there was a news article that LIC has invested in Bajaj Finance non-convertible debentures totalling Rs.5000 crores which gave the impression that the entire issue had been subscribed by LIC.

This flies in the face of basic canons of Risk Management, whereby banks and other financial intermediaries such as insurance companies spread their risks by having risk concentration limits based on borrower, group, portion of issue, industry size, proportion of their net worth, geographical area etc. Risk policy stipulates that none of the parameters should be breached, even individually. 

Such risk limits are stipulated not only in the investor company's internal risk guidelines but are also mandated as part of regulation and supervision rules of financial sector regulators such as RBI and SEBI.       

I am sure LIC with decades of investment management experience would have regulator mandated, Board approved risk-management policies. The big question is would these risk policies permit LIC to be the sole subscriber or even the sole underwriter (same risk) of this issue?

LIC seems to have made it a habit of not following such risk mitigation policies. 

In June 2025 there were news reports that LIC had fully subscribed to a Rs.4,883 crore 15 year non-convertible debentures issued by Adani Ports and Special Economic Zone Ltd.

Again, in October 2025 there was a news report that LIC had invested around Rs.33,000/- in Adani group companies, reportedly under government pressure though naturally vehemently denied by LIC.

These kinds of investments by LIC goes on to confirm that systematic loot of public funds for private gains is merrily going on and that there is systemic failure in prudent governance not only by financial intermediaries (such as LIC) and its regulators, but as well as the controlling ministries.