The Investing Institutions
Life Insurance Corporation of India
The Life Insurance Corporation of India is the larg¬est institutional investor in this country. The investments of LIC are regulated by Section 2 7-A of the Insurance Act, 1938. Consequently, a much larger portion of its investible resources is invested in Govern¬ment and other approved securities and is given as loans to socially oriented sectors. However, the LIC provides assistance to the corporate sector in the following ways :
(i) By subscribing to the bonds and shares issued by the Development Banks like !DBI, IFCI, ICIC!. SFCs.
(ii) By directly subscribing to, or underwriting the shares, bonds and debentures of the corporate sector. It also purchases corporate securities in the market(iii) By providing term loans to companies, singly or in participation with banks.
General Insurance Corporation of India
According to the guidelines issued by the Govern¬ment, till April I, 1995, 70% of the accretions to the fund of GIC were required to be invested in the so¬cially-oriented sectors, which include Central and State Government securities and loans to various pub¬lic bodies engaged in housing. Now this percentage has . been reduced to 45 per cent. Out of the balance, the GIC invests in corporate sector by way of underwriting of new issues of companies and also by way of term loans/subscriptions to privately placed debentures .
Unit Trust of India
The Unit Trust of India (UTI) is a statutory pub¬lic sector investment institution set up in 1964. It mobilises the savings of the community through the sale of its units under its various unit schemes. The resources thus mobilised are invested by the UTI mainly in the shares and debentures of the compa¬nies. Income received from these investments, after meeting the expenses of the Trust, is distributed to the unit holders annually as dividend.
The UTI provides to investors, specially the small ones, opportunities for gainful employment of their savings. By buying units, they can share in the grow¬ing industrial prosperity of the country, diversify their risks, and at the same time, derive the benefit of pro¬fessional management of their funds. The Unit Trust is always ready to buy back the unit from the holders at prices determined by it. It has distributed dividends at constantly rising rates. The dividend declared by the UTI is exempt from income-tax under Section SOL of Income Tax Act subject to certain limits.
The Unit Trust of India has introduced a number of Unit Schemes so far, viz., the Unit Scheme, 1964, the Unit Linked Insurance Plan, 1971, Unit Scheme for Charitable and Religious Trusts and Registered So¬cieties, 1981, the Income Unit Scheme, 1982, Monthly Income Unit Scheme, 1983 and Growth and Income Unit Scheme, 1983.
In September 1986, the Unit Trust of India Introduced a new Mutual Fund Unit Scheme wherein Master Shares of Rs. 10 each have been issued at par. The salient features of this scheme are :
(i) The master shares are listed on all the stock exchanges and thus provide liquidity to the investors.
(ii) The mutual fund has invested primarily in equity shares. It may also invest in money market instruments such as call deposits with, and bills dicounted by banks, short-term borrowings by compa-nies and variable rate debentures.
(iii) Master shares are freely transferable.
