LICHF to study all account details in bribery case

LIC Housing Finance’s immediate target is to ensure steady growth of its business, and review its accounts in the wake of the arrest of former chief executive R R Nair in a bribe for loan case, newly-appointed Chief Executive V K Sharma told reporters after a meeting of the board of directors.

“We are going to do that (look into the accounts) and at a convenient time we will have a press conference very soon,” he said. The board today confirmed Sharma’s appointment as the new chief executive.

“The board clearly deliberated on the entire thing and no investor needs to panic. The details of the deliberations will be issued through a press release,” Sharma said.

He said the primary agenda of the board is to study the bribe-for-loan case and the action to be taken. A preliminary report prepared by Committee of General Managers to study the accounts under scrutiny found all documentation in order, and the accounts performing well, LIC Housing Finance said in a release.

“The outstanding loan of cases under scrutiny by the Central Bureau of Investigation (CBI) is Rs 389 crore which are performing and the value of security against these loans is over Rs 1,000 crore,” the release said.

The board also authorised the audit committee to go through the preliminary report and other relevant aspects and suggest further strengthening of internal systems and controls, if required.

After shedding nearly 30 per cent following Nair’s arrest on Wednesday, LIC Housing Finance’s shares moved up 1.8 per cent to end at Rs 947.65 on the National Stock Exchange today.

R R Nair, was one of eight officials from the financial sector to be arrested by the CBI for receiving “illegal gratification” in cash and kind to favour some developers and projects.

Companies named by CBI in court include DB Realty, Mantri Realty, Lavasa, Suzlon Energy, Ashapura Minechem, JSW Power, Pantaloon Retail, and Jaiprakash Hydropower. However, CBI has said not all these companies were necessarily involved in dealings with the financial institutions.

Counting on the strong backing of the largest shareholder Life Insurance Corp of India, ratings agency Crisil reaffirmed its ratings on LIC Housing Finance. LIC holds 36.54 per cent in LIC Housing Finance and has committed to maintain its holding above 33 per cent.

On Thursday, LIC Chairman T S Vijayan clearly stated that if needed LIC would take steps to support the housing subsidiary.

Crisil expects the support from LIC in terms of ownership, common branding, and managerial inputs to continue, and expects this support to offset the impact of any potential stress on LIC Housing.