Concerned about the sale of IDBI Bank's interest in LIC, say insurance and bank staff

Written by George Mathew
| Mumbai |

Concerned about the sale of IDBI Bank's stake in LIC, say insurance and banking employees "data-lazy-src =" https://images.indianexpress.com/2018/06/lic1.jpg [19659002] Concerned about the sale of IDBI Bank's holding in LIC, say insurance and bank employees “/> The IRDAI board meeting in Hyderabad on Friday approved the proposal because an insurance company can only hold more than 15 percent equity interest in a company under IRDAI standards. (Illustration: CR Sasikumar / File)

THE GOVERNMENT'S REQUEST to sell its interest in IDBI Bank to Life Insurance Corporation (LIC) has met with strong resistance from employees in the insurance and insurance sectors. bank who have challenged a bank that is burdened by huge bad debts and losses.

"We are anxious and seriously concerned about this sale.Now, as a relevant and responsible union in LIC, it is morally interesting to know if IDBI Bank, a lender with huge bad debts near to the US, is not a big deal. a third of his book makes a good investment for LIC, "said Rajesh Kumar, general secretary. "Given the precarious situation of non-performing badets (NPAs) in IDBI Bank and LIC's intention to substantially increase its stake in this bank, there is a risk of contagion for policyholders. savings, which will have a huge impact on LIC's ability to serve its policyholders. In recent years, LIC has been fighting to increase the bonus on policies, "said Kumar in a letter to VIC President Mr. K Sharma

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On Friday, the Regulatory Authority and Insurance Development of India (IRDAI) allowed LIC to d & # 39; 39, buy up to 51 percent stake in IDBI Bank .The IRDAI board of directors in Hyderabad on Friday approved the proposal as an insurance company can hold no more than 15 percent stake in a company according to IRDAI standards.For the fiscal year ended March 2018, the gross IDB of IDBI Bank rose from 21.25% to 27.95% at 31 March 2017. The bank recorded a net loss of 8,238 crore in 2017-18, compared to 5,158 crore in 2016 17.

The outstanding portfolio of IDBI Bank (including facilities not financed by funds) represents 35.9% of total loans. Its gross NPAs at the end of the March quarter rose to Rs 55,588 crore. This means that the bank will need significant capital to clean up its books and maintain minimum levels of regulatory capital. "It should also be noted that no private investor has shown interest in IDBI Bank even though the government has wanted to sell shares for more than two years now," said Kumar

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In a letter to Finance Minister Piyush Goyal, CH Venkatachalam, general secretary, All India Bank Employees Association, said: " It is relevant to point out that, although investment is part of LIC's business, it can not be that all deficit institutions must be bailed out by LIC at the expense of the interests of ordinary people who are LICs. investors in LIC. "

" It is also well known that, as banks are facing huge bad debts, LIC is also facing a huge portfolio of non-performing badets / investments. to take rigorous measures to solve this vital problem, add other investments in a bank, which faces huge bad debts and losses, is not a good idea ", at- he d it. "money so that it first ensures the safety of the insureds' fund and then generates a return on its investments," said Kumar. "They will write one of the following: amount of more than 50,000 rupees. LIC has interests in 8-10 banks. If they want to increase their stake in the banks, then SBI should be the ideal bank to acquire a majority or minority stake, "said an official of the IDBI Bank Officers Association

.The Congress and the CPI (M) also questioned the government's decision to allow LIC to take control of IDBI Bank.

"If bad debts are due to bad and bad faith decisions of bank managers, they must be taken apart. If the accumulation of bad debts is due to a change in the economic scenario and if such infrastructure loans are bad today, the government must step in and provide additional capital, "said Venkatachalam The proceeds from the sale of the IDBI stake will go to the government, not to the bank.

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