Take the pledge to vote

For a better tommorow#AajSawaroApnaKal
  • I agree to receive emails from News18

  • I promise to vote in this year's elections no matter what the odds are.
  • Please check above checkbox.

    SUBMIT

Thank you for
taking the pledge

Vote responsibly as each vote counts
and makes a diffrence

Disclaimer:

Issued in public interest by HDFC Life. HDFC Life Insurance Company Limited (Formerly HDFC Standard Life Insurance Company Limited) (“HDFC Life”). CIN: L65110MH2000PLC128245, IRDAI Reg. No. 101 . The name/letters "HDFC" in the name/logo of the company belongs to Housing Development Finance Corporation Limited ("HDFC Limited") and is used by HDFC Life under an agreement entered into with HDFC Limited. ARN EU/04/19/13618
LIVE TV DownloadNews18 App
»
2-min read

LIC Unions Oppose Acquisition of IDBI Bank by Insurer

As per reports, LIC has been made to invest Rs 1,850 crore in PSBs in 2014-15 and 2,539 crores in 2015-16, the federation said in a letter to the LIC Chairman.

PTI

Updated:July 10, 2018, 3:46 PM IST
facebookTwitterskypewhatsapp
LIC Unions Oppose Acquisition of IDBI Bank by Insurer
File photo: IDBI Bank.
Loading...

New Delhi: LIC employee unions have said that they are against the proposal for the insurer to acquire 51 per cent stake in IDBI Bank as it would be hurt the interest of policyholders and their premium money.

Citing past performance of the investments made in the public sector banks (PSBs), Federation of LIC Class-I Officers Association said: "There is considerable erosion in the share value of these banks which may affect our profitability also.

"In a way, we are forced to participate in the bank recapitalisation programme. The acquisition of a major stake in IDBI has to be viewed with concern in this context."

As per reports, LIC has been made to invest Rs 1,850 crore in PSBs in 2014-15 and 2,539 crores in 2015-16, the federation said in a letter to the LIC Chairman.

LIC currently holds 11 per cent stake in IDBI bank and its total stressed portfolio is 35.9 per cent of total loans. The gross non-performing assets at the end of March quarter stood at Rs 55,588 crore.

This means that the bank will need a significant amount of capital to clean-up its books and maintain minimum levels of regulatory capital, All India LIC Employees Federation General Secretary Rajesh Kumar said.

"It should also be noted that no private investor has shown any interest in IDBI bank even though the government has been trying to sell equity for over two years now. Given the precarious situation of NPA in IDBI Bank and the intention of LIC to substantially raise its stake in the said bank, there is contagion risk on the policyholders' precious savings, which will grossly impact the capability of LIC to serve its policyholder," Kumar said.

In the past few years LIC has been struggling to raise the bonus on the policies, he said in a letter to LIC Chairman.

"In the March-ended quarter, the bank's net loss stood at Rs 5,663 crores. It is also being reported that the government which could not get a buyer for the ailing bank is trying to off-load its shares to meet the disinvestment target through LIC," Federation of LIC Class-Officers Association general secretary S Rajkumar said.

The insurance laws (Amendment Act), 2015 do not allow any insurer including LIC to hold more than 15 per cent stake in any company, Rajkumar said, adding that this is done to protect the interest of the policyholders and bypassing this will undermine the safety of our life fund, which is nothing else but the hard earned money of our policyholders, over a period of 60 years.

Section 35 of the insurance act also does not allow a life insurer to acquire or have control in a non-insurance industry which means the management control is not going to come to our hands, it said.

"It is to be understood that no preferential voting rights, management rights or control will be granted to LIC. In the light of these facts it would be prudent to analyse whether this proposed investment decision is going to be in the interest of policyholders, employees and organization itself," he added.

Last month, Insurance Regulatory and Development Authority of India (Irdai) permitted LIC to pick up to 51 per cent stake in the debt-ridden IDBI Bank.

Get the best of News18 delivered to your inbox - subscribe to News18 Daybreak. Follow News18.com on Twitter, Instagram, Facebook, TikTok and on YouTube, and stay in the know with what's happening in the world around you – in real time.

Subscribe to Moneycontrol Pro and gain access to curated markets data, trading recommendations, equity analysis, investment ideas, insights from market gurus and much more. Get Moneycontrol PRO for 1 year at price of 3 months. Use code FREEDOM.

| Edited by: Padmaja Venkataraman
Read full article
Loading...
Next Story
Next Story

Also Watch

facebookTwitterskypewhatsapp
Most Active
Company Price Change %Gain
Indiabulls Hsg 550.75 -0.11
HDFC 2,100.00 -0.84
Reliance 1,278.00 -0.80
Yes Bank 79.45 3.79
HDFC Bank 2,227.70 -0.08
Company Price Change %Gain
SBI 290.95 0.38
Indiabulls Hsg 551.10 -0.04
Yes Bank 79.45 3.79
Maruti Suzuki 5,975.15 2.74
SpiceJet 143.50 3.02
Top Gainers
Company Price Change %Gain
UPL 549.05 4.14
Yes Bank 79.45 3.79
Power Grid Corp 211.15 2.92
Maruti Suzuki 5,975.05 2.73
IndusInd Bank 1,439.10 2.73
Company Price Change %Gain
Yes Bank 79.45 3.79
Power Grid Corp 211.25 2.85
Maruti Suzuki 5,975.15 2.74
IndusInd Bank 1,438.25 2.70
Axis Bank 675.55 1.86
Top Losers
Company Price Change %Gain
TCS 2,165.10 -1.78
Vedanta 144.40 -1.47
HCL Tech 1,062.75 -1.25
BPCL 351.20 -0.92
HDFC 2,100.00 -0.84
Company Price Change %Gain
TCS 2,163.50 -1.87
Vedanta 144.30 -1.54
HCL Tech 1,061.65 -1.37
HDFC 2,098.75 -0.91
Reliance 1,277.40 -0.85

Live TV

Loading...
Countdown To Elections Results
To Assembly Elections 2018 Results