Prime Minister A B Vajpayee will be launching the much-awaited Varishta Bima Pension Yojana of the Life Insurance Corporation in New Delhi on July 14, for which the government has guaranteed 9 per cent interest per annum.

Disclosing this in Bangalore, Union Minister of State for Finance (expenditure, banking & insurance) Anand Rao V Adsul hinted that the government may consider relaxing the upper age limit for the new pension plan beyond 79 years keeping in view a longer life expectancy.

The proposed LIC scheme, announced by Union Finance Minister Jaswant Singh in the Union Budget for the current fiscal year (2003-04), stipulated that senior citizens in the age group of 55-79 would be eligible to avail its benefits.

As a policy, the maximum age for the pension plan has been fixed at 79 years. In view of the representations made to the LIC and the government by the senior citizens, we may consider extending it by one or two years," Adsul stated.

Asked whether the government would consider lending financial assistance to the LIC for subsidising the high interest burden of 9 per cent on the pension plan, the minister said the government was committed to meet its obligations.

"Whenever a scheme or policy is launched, it is the responsibility of the government to ensure that the financial commitment is met by it. Being the majority owner of the country's largest insurance company, we will look into it," Adsul affirmed.

The minister has gone on record saying that the LIC would require Rs 1700 crore (17 billion) to maintain its solvency once the Varishta Bhima Yojana was launched with a high interest rate of 9 per cent.

Incidentally, the LIC had to postpone the introduction of the pension plan last month as the prime minister was not available for its formal launch.

Adsul also declared that efforts were being made by the government to reduce its equity holding in the nationalized public sector banks to 33 per cent from the current 51 per cent and above during the current fiscal year.

"The finance ministry is awaiting the recommendations of the standing committee for moving the amendment bill to the Banking Regulations Act in Parliament. Once we get them, we will place the bill in both the houses for the approval," Adsul asserted.

The minister, however, declined to comment whether the proposed equity dilution would be carried out with a premium in the light of the banking stocks quoting higher on the bourses.

On the need to regulate the working of the cooperative banks for preventing further scams, Adsul said the ministry was in favor of a single controller with the RBI as their watchdog.

"The Joint Parliamentary Committee has also recommended that the coop banks should come under the purview of the state's registrar as a single authority to supervise their operations.

"For efficient regulation of these banks, I had recommended a separate deputy governor be appointed by the RBI," Adsul added.