New Delhi: Slamming the Narendra Modi government for another instance of "financial anarchy", the Congress on Saturday said savings of common man in life insurance is being used to save the life of a "bleeding" PSU, IDBI Bank, flouting all regulatory norms.
"Hard-earned savings of 38 crore LIC policyholders is at risk and will be burdened because Modi government wants to cover up its sins in the banking sector," said Congress spokesperson Priyanka Chaturvedi.
"Flouting all established laws and regulations, Modi government is undertaking yet another episode of financial anarchy," she added.
The media reported on Saturday that the Insurance Regulatory and Development Authority of India (IRDAI) has approved the plan of Life Insurance Corporation of India (LIC) to buy 51 per cent stake in the state-owned IDBI Bank.
Chaturvedi said the government has now discovered a unique way to rub salt on the savings of LIC policyholders by forcing the insurance company to buy stake in a loss-making IDBI Bank, thereby abusing the faith of common people in LIC and burdening them with an estimated Rs 13,000 crore.
"In this process, the Modi government is completely flouting the Banking Regulation Act, Insurance Regulatory Act, Insurance Act, Insurance Regulatory and Development Authority Act and SEBI Act," she said.
Chaturvedi said squeezing the hard earned savings of the common people is the sole motto of the Modi government.
"It is attacking the common people on multiple fronts -- the RBI testifies that money parked in Small Savings Scheme has seen a seven-fold drop (in 2017-18) due to reduction of interest rates in various savings schemes.
"Modi government is earning windfall gains of Rs 10 lakh crore due to taxes on fuel prices and a flawed GST, and demonetsation is still hurting the savings of people," she added.
Chaturvedi said the IDBI Bank is the worst performing public sector bank whose Q4 losses have swollen to Rs 5,663 crore and gross NPAs to a whopping Rs 55,588.26 crore.
"It has a bad loans ratio of close to 28 per cent. This basically means that Rs 28 out every Rs 100 the bank has given out as a loan hasn't been repaid for 90 days or more.
"The Centre currently holds an 80.96 per cent stake in IDBI Bank. If it has to own a 51 per cent stake, it needs to buy 40.82 per cent stake more from the government. This would cost LIC Rs 9,895 crore at its current valuation.
"As the majority owner of the bank, LIC will have to keep infusing capital into the bank, to keep it going, in the years to come. And this is where common people will feel the burden," she added.
The party leader said the Modi government's "malicious intentions" are writ large on two counts -- first, since the Air India "sell-off" completely flopped, it is now hell bent to achieve this years' disinvestment target of Rs 80,000 crore, and using the LIC for the IDBI Bank is the easiest option in this context.
"Second, if it had continued to own the IDBI Bank, it would have had to continue providing capital to a loss-making bank, in the future. That obligation now comes down, with the LIC also having to provide capital."
"Since LIC's capital is funds collected from insurance policies, it is not fair for the policyholders, who would find their money being funnelled into sick banks," said Chaturvedi.
She also asked: "Why is the government jeopardising the savings of 38 crore LIC policyholders by burdening them with Rs 13,000 crore bailout package for IDBI?"
"Is Modi government going to do the same for all banks?" she further asked.
Chaturvedi said: "There is no free lunch in economics. The LIC policy holders will have to pay for this in form of lower returns. Economy will only suffer due to such financial tricks."