KARACHI, March 2: The State Life Insurance Corporation (SLIC) is drawing up a scheme of productive and profitable investment of provident funds of the private and government companies.

This scheme, according to SLIC sources, will be offered to about 1,200 companies with which the Corporation has group insurance arrangement. “At least 70 of these 1,200 companies are big and have enough potential for investment of provident fund.”

Being one of the biggest institutional investor under government control, the SLIC’s big stake—more than 75 per cent—remains in the government securities. Out of Rs65 billion investment fund, the corporation has put about Rs55 billion in government securities. Of these, Pakistan Investment Bonds (PIBs) have claimed Rs20 billion investment in the year 2001.

The SLIC now wants to create a secondary market and sub secondary market for these PIBs and looks at the 70 big private and government companies maintaining huge provident funds potential sources of investment.

Simultaneously, the investment executives want a greater role for them in corporate funding and in the stock exchanges in the coming years.

At the moment, analysts and investment executives are giving final touches to the scheme to get a final approval from the Board of directors. After this approval the SLIC will plan marketing of this scheme.

Provident fund investment, they say, is expected to facilitate development of secondary market for the Pakistan Investment Bonds (PIBs), which are now being traded with the primary dealers.

SLIC is the biggest investor in PIBs and has a stake of Rs20 billion at present. In last one year, SLIC’s investment in PIBs has gone up from Rs4.5 billion to Rs20 billion. In fact PIBs are the single avenue on which SLIC has made the highest investment of over Rs15 billion in last one year.

SLIC’s investment strategy is governed under a 1970 Statutory Regulatory Order (SRO), which stipulates various ratios in which the investment can be made in government securities, in government approved securities.

In stocks, SLIC’s portfolio increased by about Rs1 billion to Rs6.5 billion in 2001 from Rs5.4 billion a year ago. “But 2001 was not a sound and normal year,” a source said while referring to the impact of September 11 attack in New York and fall out of the US air raids on Afghanistan on October 7 last year.

Under the policy, SLIC makes equity investment in selected companies. Only those companies which have been declaring dividend for the last five years. The new companies and blue chips like Hubco are outside the purview of SLIC’s investment operations.

Corporate loaning is said to be Rs1.9 billion and confined to seven companies. Four of these companies are in leasing. SLIC is now processing two applications of huge amount of loan. One is from a local bank and the other is an oil distribution company. “The demand is for Rs12 to Rs14 billion,” a source said.

Besides these, the SLIC offers loan facilities to the policyholders, which is a fully secured loaning.