Mandatory requirement to maintain fund with an external agency like LIC?

If company is having 150 employees should go with LIC for Gratuity payments or can pay directly from its Bank account. Is there any mandatory requirement to maintain fund with an external agency like LIC.

I am enclosing the expert of the relevant section for your information:-
3[4A. Compulsory Insurance.- (1) With effect from such date as may be
notified by the appropriate Government in this behalf, every employer, other than
an employer or an establishment belonging to, or under the control of, the
Central Government or a State Government, shall, subject to the provisions of
sub- section (2), obtain an insurance in the manner prescribed, for his liability
for payment towards the gratuity under this Act, from the Life Insurance
Corporation of India established under the Life Insurance Corporation of India
Act, 1956 (31 of 1956

A reference to original act is always informative.
HR executives must read all relevant
Acts and rules like Gratuity Act,MW act etc.
Those acts and rules made under the concerned Acts are mandatory reading for any HR to do his /her job properly.

Dear Friend,
Where is the problem?
This is good both for employer and employee. You can not call LIC or anyother institutions have the sanctitiy in eye of law are not as an external part than the integral part, as per the provision recomend under the act.

Dear Friends,
Before Division of AP into Telangana, by notification AP Govt has made mandatory,
subject to the provisions of sub- section (2), obtain an insurance in the manner prescribed, for his liability for payment towards the gratuity under this Act, from the Life Insurance
Corporation of India established under the Life Insurance Corporation of India
Act, 1956 (31 of 1956.
Please correct me, Other States are yet to follow the same.
Regards,