A day after the Insurance Regulatory and Development Authority of India (IRDA) approved the Life Insurance Corporation (LIC) of India’s proposal to buy up to 51 per cent stake in debt-laden IDBI Bank, the Congress and the Left parties on Saturday slammed the move. The CPI(M) accused the BJP-led NDA government of destroying the regulatory mechanism and called it “crony capitalism of the worst kind”.
The Congress said the BJP government is desperate to achieve its disinvestment target of Rs 80,000 crore for this year after the Air India “sell-off” flopped. Congress spokesperson Priyanka Chaturvedi said, “If it (government) had continued to own IDBI Bank, it would have had to continue providing capital to a loss-making bank in future. That obligation now comes down, with the LIC also having to provide capital”.
“Since the LIC’s capital is funds collected from insurance policies, it is not fair on policyholders to find their money funnelled into sick banks,”she added. She asked, “Why is Modi government jeopardising savings of 38 crore LIC (policy) holders by burdening them with Rs 13,000 crore bailout package of IDBI? If this deal goes on, wouldn’t floodgates of similar deals of LIC bailing out public sector banks be opened?…. Is the (Narendra) Modi government going to do the same for all banks?”
Condemning the “BJP government’s decision of asking the LIC to bail out the worst NPA [non-performing assets] defaulter bank”, the CPI(M) said in a statement, “LIC is the repository of people’s savings in the form of insurance policies…using this capital to bailout the worst defaulter bank is tantamount to public loot of people’s savings.”
The party stated, “The names of rich defaulters are kept as a secret by the Modi government. Instead of recovering loans from defaulters, they are being bailed out by people’s savings deposited in insurance policies. The LIC is investing Rs 13,000 crores for this takeover. This amount should have been invested to give policyholders a better return. Instead, it is being used to bailout defaulters. This is crony capitalism of the worst kind.”
Arguing that the LIC is not mandated to enter the banking business, the CPI(M) said the Modi government is forcing a sudden change in rules. “The regulatory mechanism is being destroyed by this government to protect rich defaulters from repaying their loans,” it said, and demanded that the decision be rescinded.