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Govt flouting all laws & regulations in forcing LIC to invest in IDBI: Cong


New Delhi, Charging the Narendra Modi Government with flouting the Banking Regulation Act, the Insurance Regulatory Act, the Insurance Regulatory and Development Authority Act, the SEBI Act and other acts by forcing the state-run LIC to buy stake in loss-making IDBI, the Congress on Saturday accused the Centre of indulging in 'financial anarchy'. Talking to reporters here, AICC spokesperson Priyanka Chaturvedi and AICC media panelist Gaurav Vallabh said, 'squeezing the hard-earned savings of the common people is the sole motto of the Modi government. Now it has discovered a unique way to rub salt on the savings of LIC policy holders too -- forcing LIC to buy a stake in the loss-making IDBI Bank, thereby essentially abusing the faith of the common people in LIC and burdening them with an estimated Rs 13000 crore. In this process, the Modi Government is completely flouting the Banking Regulation Act, the Insurance Regulatory Act, the Insurance Regulatory and Development Authority Act, the SEBI Act and other acts .' She said media reports reflect that the Insurance Regulatory and Development Authority of India (IRDAI) board approved LIC's investment in IDBI Bank, allowing LIC to own up to 51 per cent in the beleaguered lender. 'IDBI bank is the worst performing public sector bank whose Q 4 losses have swollen to Rs 5,663 crore and gross NPAs to a whopping Rs 55,588 crore. It has bad loans ratio of up to 28 per cent. This basically means that Rs 28 out of every Rs 100 the bank has given out as loan hasn't been repaid for 90 days or more. To buy 51 per cent stake would cost LIC Rs 9,895 in its current valuation. That is basically small change for the LIC. But that is not where it will stop. As the majority owner of the bank, LIC will have to keep infusing capital into the bank, to keep it going, in the years to come. And that is where the common people (38 crore LIC policy holders) will feel the burden,' Ms Chaturvedi said. Speaking on the issue, Mr Gaurav Vallabh said the real intention behind 'forcing LIC to buy stake in IDBI' is to meet the disinvestment targets set by the Government. 'Since Air India 'sell off' completely flopped, the Modi Government is hell bent to achieve this year's disinvestment target of Rs 80,000 crore -- using LIC for IDBI Bank is the easiest option. Secondly, if it had continued to own IDBI Bank, it would have had to continue providing capital in a loss-making bank, in the future. The obligation now comes down, with LIC also having to provide capital. Since LIC's capital is funds collected from insurance policies, it is not fair on policy holders to find their money funneled into sick banks,' Mr Vallabh said.He said as per the law, LIC cannot invest more than 15 per cent in IDBI. In addition, both IDBI Bank and LIC own mutual fund arms, which too are not allowed under the SEBI rule, he said.Ms Chaturvedi asked the Government why it was jeopardising the savings of the 38 crore LIC policy-holders by burdening them with a Rs 13,000 crore bailout package of IDBI. "If this deal goes on, wouldn't the floodgates of similar deals of LIC bailing out public sector banks be opened.38 crore LIC policy holders will have to pay for this and other such disastrous decisions in the form of lower returns. Such financial tricks by the Modi Government will only create a bigger problem and our economy shall suffer,' Ms Chaturvedi warned.

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