JOIN USThe insurance regulator's nod for Life Insurance Corporation (LIC) buying majority stake in the troubled IDBI on Saturday invited criticism as Opposition parties pounded on the Narendra Modi government, saying public money is being used to bail out the bank's wilful defaulters.
Demanding the roll-back of the decision, the Opposition accused the Centre of "forcing" the LIC into the deal.
Using LIC capital, they claimed, the government was trying to bail out the bank, which is in dire financial straits, having non-performing assets to the tune of Rs 55,588.26 crore and a bad loan ratio of 28%. They said it will have implications on the savings of 38 crore policy holders in LIC.
Congress spokesperson Priyanka Chaturvedi said the savings of the common people in life insurance is being used to save the "life of a bleeding bank".
"If the LIC has to own 51% stake, it needs Rs 9,895 crore at its current valuation. That is basically small change for LIC. But that is not where it will stop. LIC will have to infuse more capital to keep it going. This is where common people will feel the burden," she said.
The remarks came a day after the Insurance Regulatory and Development Authority of India (IRDAI) gave its go ahead for the proposal to allow LIC to pick controlling state in the bank after relaxing existing rules for investment. At present, an insurer cannot hold more than 15% stake in a company.
Trinamool Congress tweeted, "this BJP government will not even spare the money of people’s life savings in LIC. That too they want to grab. When will this stop."
AAP spokesperson Raghav Chadha said, "public money parked in the most trusted LIC now used to bail out IDBI's wilful defaulters. This is a daylight robbery."
The CPM too opposed the move with party general secretary Sitaram Yechury saying, "LIC is the repository of people's savings. Using this capital to bailout the worst NPA defaulter bank amounts to a public loot of people's savings. Why are names of rich defaulters kept secret and they bailed out, but our insurance money used to help them?"
In a statement, the CPM said the government was "forcing sudden" changes in the rules to allow LIC to enter banking, and the regulatory mechanism is being destroyed to protect the rich defaulters from repaying their loans.
It said the LIC investment in the IDBI should be ideally invested to give policy holders a better return. "Instead, it is being used to bailout the defaulters. This is crony capitalism of the worst kind. The rich can loot and scoot but the common Indian will pay back their loans from their savings," the party said.