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The Life Insurance Corporation of India Act was passed by Parliament in:
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Answer: Option C — 1956
Detailed Solution
The Life Insurance Corporation of India Act was passed by Parliament in June 1956, and the Life Insurance Corporation of India (LIC) came into existence on 1 September 1956.
Nationalisation of life insurance:
- Before 1956, life insurance in India was provided by many private Indian and foreign companies.
- Many of these companies were badly managed, and there were cases of fraud and failure.
- On 19 January 1956, the government took over the management of life insurance companies through an ordinance.
- The LIC was formed by merging about 245 Indian and foreign insurers and provident societies.
Objectives of the LIC:
- To spread life insurance widely, especially to rural areas and weaker sections, at a reasonable cost.
- To mobilise people's savings for national development, by investing in government securities and infrastructure.
- To provide security to policyholders.
Growth of the LIC:
- It became the largest life insurer in India and one of the largest in the world.
- It has a vast network of branches and agents across the country.
- Its slogan is "Yogakshemam Vahamyaham", meaning "Your welfare is our responsibility", taken from the Bhagavad Gita.
- Its headquarters is at "Yogakshema" in Mumbai.
Opening up of the insurance sector:
- The Malhotra Committee (1993) recommended opening the insurance sector to private companies.
- The Insurance Regulatory and Development Authority (IRDA) Act, 1999 set up a regulator and allowed private companies to enter the sector.
- The regulator is now called the IRDAI.
LIC's IPO:
In May 2022, the government sold a part of its stake in the LIC through an initial public offering (IPO), one of the largest in India's history.
General insurance:
General insurance was nationalised later through a separate law, and the General Insurance Corporation of India was set up with four subsidiaries.
Why not the other options?
- ✗1947 is the year of independence.
- ✗1961 and 1972 do not match the year of the LIC Act.
Quick tip
Remember: LIC Act = 1956; LIC formed on 1 September 1956 by merging about 245 insurers.
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Financial Markets & Institutions — Preparation
This question tests your understanding of Financial Markets & Institutions, a key topic in the General Knowledge section. The detailed solution above uses a step-by-step approach to show the reasoning, and where available, a shortcut that helps you solve similar questions in under 90 seconds during the actual exam.
This topic covers India's financial institutions and markets: regulators such as SEBI, IRDAI and PFRDA, development banks such as NABARD, SIDBI and EXIM Bank, the money market and capital market, stock exchanges and indices, insurance, and microfinance and self-help groups. Questions usually ask what each regulator oversees, where institutions are headquartered, and what market terms mean (bull and bear markets, IPO, Sensex and Nifty). For example, NABARD supports agriculture and rural development, SIDBI supports small industries, and SEBI regulates the securities market. Practise the financial markets and institutions questions below, written in the style of the general awareness sections of exams such as SSC, banking, railways, CUET GAT, MAH CET and CLAT. Each question comes with a detailed explanation that adds related facts, so every question helps you revise more than one point.