The move comes barely two weeks after Irda's new investment guidelines capped the holding in one company at 10 per cent and mandated a 25 per cent group exposure limit.

An LIC team headed by Chairman T S Vijayan and Managing Director Thomas Mathew met Irda officials in Hyderabad today to press for its demand.

"LIC has asked Irda for a special dispensation. It wants permission to invest up to 20 per cent in a single investee company as its fund size is large," said a source close to the development.

Vijayan refused comment, but Mathew said it was a routine meeting and declined to disclose details. Irda Chairman J Hari Narayan could not be reached for comment.

The public sector insurance company holds over 10 per cent in 39 listed blue-chip companies. The market fears that the prices of these shares would crash and even the market indices would be impacted if LIC starts selling on these counters.

Irda officials had earlier told Business Standard that the regulator was willing to give LIC time to pare its holdings to ensure that the new norms did not destabilise the system.