"The issue (of increasing equity investment cap for LIC from 10% in a listed company to 30%) has been taken up with the regulator and it will get notified soon. It was addressed to Irda at the last broad meeting," Financial Services Secretary Rajiv Takru told reporters over the weekend, after the board meeting of the insurance giant.

Justifying the decision to treble LIC's investment limit, Takru said the Corporation was sitting on trillions of rupees which have to be invested.

"There is an urgent need to develop an in-house capacity for proper assessment of investments. This is also needed to ensure that LIC can meet expectations of its policyholders", he added.

As part of its efforts to meet the Rs 30,000-crore divestment target, the government last November had trebled the investment cap of LIC to 30% from 10%. However then Irda chairman J Harinarayan had opposed the move.

Harinarayan went public with his opposition to the government plan saying the move is "imprudent" and would trigger take-over code norms under the existing Sebi norms, which in turn would make the insurer a majority stakeholder in companies which are not directly related to its core business.

He had further argued that insurers and pension funds should be "conservative" in investing in corporates unlike VCs that are allowed by Sebi to invest up to 30% in a company.

According to new takeover code norms, any company acquiring 25% in another firm has to make an open offer for buying another 26% from the public.

LIC has been the last resort for the government to salvage its divestment efforts. For instance, when the government sold 5% in ONGC last year, it was LIC that came to the rescue of the issue at the last minute.

By February, meanwhile, Irda allowed LIC and other large private insurers could invest up to 12-15% in a listed company, depending on the size of the controlled funds which include only non-unit linked funds and shareholder funds.

While nearly all private insurers have most of their investments in unit-linked funds, LIC has over Rs 12.5 lakh crore in traditional funds.

"Irda believes that this is commensurate and appropriate given the size of funds under consideration without adversely affecting the prudential management of investments," the regulator had said in a statement.