No cut ordered on housing loans: Govt

Earlier this week,CBI arrested top officials of LIC and its affiliates as also other banks and financial institutions for granting corporate loans in lieu of grafts.

Market regulator SEBI is also looking into possibilities of insider trading in companies which are beneficiaries of the hosing finance racket.

Coming under the intense government scrutiny,the housing and banking shares have taken a big hit this week at bourses,with BSE index Sensex plunging below 19,000 points in intra-day trading today.

Allaying fears of home loan seekers and realty players,Financial Services Secretary R Gopalan told reporters that the government has not directed banks and financial institutions to cut down on their exposure to the sector.

“No,why we should say this,” Gopalan said when asked if the government has directed the PSU banks to reduce their exposure to the real estate sector.

On the other hand,major realty players put up a brave front to dispel the rumours that scam would bring down the prices in the sector saying any individual misdemeanour was unlikely to impact the demand and prices.

“Property prices are subset of demand. We do not foresee any negative impact on demand. Hence the prices will not come down,” Jones Lang LaSalle India Chairman and country head Anuj Puri said.

Finance Minister wanted banks to ensure that the invested money is safe.

“You know I have already instructed banking and financial institutions to look into all these issues and they should ensure that institutions money is saved,” Mukherjee said.

Corporate Affairs Minister Salman Khurshid said the Government would look at strengthening regulatory mechanism to avoid recurrence of this kind of racket.

“The Government has several regulatory mechanisms in place. But when such things happen,despite these mechanisms,there is a requirement to look at further strengthening of this mechanisms,” he said.

Refusing to call it a scam,LIC Chairman T S Vijayan said it involves individual officers and asserted that state-run insurer is very strong.

“A scam is somebody misusing money… somebody is losing money… (scam is,if) these are fake schemes. It is proven that they are individuals who are charged by CBI. That legal procedures will take its own course,” Vijayan said.

Mutual funds industry expert A P Kurian said the racket is an aberration and would not dampen investors confidence.

“I don’t think investors’ confidence is shaken. There is nothing like a scam. Whatever has happened is an aberration,” Kurian said.

Meanwhile,LIC Housing Finance has appointed V K Sharma as CEO in place of Ramachandran Nair,who was arrested in connection with the racket. Sharma will take charge early next week,Vijayan said.

Market regulator SEBI also said the regulator would continue to take steps to protect the interests of investors.

“Regulator’s job is investor protection. So,we (will) continue to take steps to protect investors,” SEBI wholetime member Prashant Saran said.