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Letter to BS: Why should LIC suffer for reckless lending of IDBI, PSBs?

Does LIC have no system where someone assesses the return on its investments?

Business Standard 

With reference to the article “LIC lost money in 18 out of 21 public sector bank shares in last 2.5 years” (July 2), forcing a public sector entity to increase its investment in another loss making entity, that is, IDBI Bank is a gross misuse of public money and a disservice to the interests of the LIC policy holders. Why should LIC suffer for the reckless lending of IDBI and other PSBs? Does LIC have no system where someone assesses the return on its investments ? Does the LIC treasury work on a professional basis? What about the contagion effect of loss making banks on the balance sheet of the insurance company? How financially strong is LIC itself? How much investment can it safely take in loss making entities?

The government instead of speeding up the process of resolution of the NPA problem of PSBs and carrying out comprehensive reforms of these entities is coming up with half baked proposals of Bad Bank and increasing LIC investment in loss making banks. Is it wise or ethical? These moot questions need to be answers.

Arun Pasricha Delhi

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First Published: Mon, July 02 2018. 21:50 IST