Mumbai | The Congress in Mumbai has accused the Centre of pressuring Life Insurance Corporation (LIC) and State Bank of India (SBI) to bail out debt-ridden Infrastructure Leasing & Financial Services (IL&FS).
LIC is the single largest owner in IL&FS with 25.34 percent stake, while SBI holds 6.42 percent in the infra major backed by the government. The IL&FS group is facing a serious liquidity crisis and has defaulted on interest payment on various debt repayments since August 27. It has over Rs 91,000 crore in debt at the consolidated level.
Addressing a press conference Friday, Mumbai Congress president Sanjay Nirupam alleged that “bankruptcy” at the infrastructure lending giant is a result of “poor” corporate governance at the company under the BJP-led government. The Centre has been pressurising the state-owned LIC and SBI to bail out the debt-ridden company with money that belongs to the common people of the country, he said. The former MP demanded a probe into the matter.
“Being a 30-year old infrastructure lending giant, IL&FS has gone completely bankrupt today. How did the debt of this company jump by 44 percent and its profitability decline by 900 percent only in the past three years?” he asked. The entire stock market has been shaken in the past two weeks over this issue, Nirupam said.
LIC has almost 29 crore policyholders and a majority of them are common people. The government wants LIC, along with the largest public sector bank SBI, to spend their money which belongs to the common people to protect the foreign investors, he said. The government is monitoring the situation of IL&FS and would take appropriate action to ensure that there is no undue impact on the financial system, said Economic Affairs Secretary S C Garg Friday in New Delhi.
On September 25, Finance Minister Arun Jaitley said the government is “closely” monitoring the situation arising out of the defaults by IL&FS Group. The same day, LIC Chairman V K Sharma said that as a shareholder it would not allow debt-ridden IL&FS to collapse and would explore options to revive it.
“We will ensure IL&FS does not collapse. We will not allow contagion to spread from IL&FS… All options are open (including raising stake in the company),” Sharma had said after meeting Jaitley.
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