Source: https://www.newsclick.in/how-govt-milking-cash-cow-lic-endangering-indias-most-trusted-life-insurer
Govt. is repeatedly turning to LIC for its disinvestment agenda. The insurer’s NPAs have doubled since the Modi regime took over, and now there is the possibility of it bailing out debt-ridden IL & FS.
Praneta Jha 29 Oct 2018
EXCERPT from this article
In any case, LIC chairman VK Sharma has said that IL&FS would not be allowed to collapse and that all options were on the table.
However, the question remains as to why LIC — entrusted with insurance and pension funds of millions of policyholders — should come to the rescue of a disaster that is a case of cronyism, mismanagement, fraud and near-complete lack of accountability and transparency?
Meanwhile, there have already been calls from the industry to privatise LIC, even as it continues to rule the roost in the life insurance market, even after private companies were allowed to enter the business of life insurance in 1999-2000.
Speaking to Newsclick, Amanulla Khan, president of All India Insurance Employees’ Association, said, “LIC goes for long-term investments and does it prudently, and so it usually earns good returns. It is a strong company, but if the present trend continues, it does not bode well for the company’s future.”
Govt. is repeatedly turning to LIC for its disinvestment agenda. The insurer’s NPAs have doubled since the Modi regime took over, and now there is the possibility of it bailing out debt-ridden IL & FS.
Praneta Jha 29 Oct 2018
EXCERPT from this article
In any case, LIC chairman VK Sharma has said that IL&FS would not be allowed to collapse and that all options were on the table.
However, the question remains as to why LIC — entrusted with insurance and pension funds of millions of policyholders — should come to the rescue of a disaster that is a case of cronyism, mismanagement, fraud and near-complete lack of accountability and transparency?
Meanwhile, there have already been calls from the industry to privatise LIC, even as it continues to rule the roost in the life insurance market, even after private companies were allowed to enter the business of life insurance in 1999-2000.
Speaking to Newsclick, Amanulla Khan, president of All India Insurance Employees’ Association, said, “LIC goes for long-term investments and does it prudently, and so it usually earns good returns. It is a strong company, but if the present trend continues, it does not bode well for the company’s future.”
He said the union was not too concerned about the IDBI bank deal because LIC had wanted a bank of its own, since “all major banks have their own insurance company and cannot act as our agent.”
But, he said, the business of always being made to bail out troubled companies was not good for LIC’s long-term health and financial stability.
“The government must allow functional autonomy to LIC and let it make its own investment decisions. The government should not interfere or force us. LIC is trustee to its policyholders, after all, and while their money is safe (since it carries government guarantee), the immediate question is, what is going to happen to the future returns on the policyholders’ investments? Is this the wisest way to invest the hard-earned money of the people who have taken life insurance from LIC? What will happen to LIC’s future?”
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