Nirupam demands Modi-led BJP govt to stop pressurising LIC, SBI to bail out ILFS
30 September, 2018
Congress leader Sanjay Nirupam in a press conference claimed that PM Modi and Finance Minister Arun Jaitley have been pressurising state-owned Life Insurance Corporation of India (LIC) and State Bank India (SBI) to bail out debt-ridden Infrastructure Leasing and Financial Services (ILFS) with money that belongs to the common people of the country.
Further Nirupam has demanded a high-level probe into the matter in order to investigate the role of multiple BJP ministers who he alleged have been taking advantage of their positions and exploiting ILFS for their vested interests.
While addressing the media in a press conference, Nirupam said, "Being a 30-year-old infrastructure lending giant, ILFS has gone completely bankrupt today. How did the debt of this company jump by 44 per cent and its profitability decline by 900 per cent only in the past 3 years? The entire stock market has shaken in the past 2 weeks over this issue. Despite all this, PM Modi and Finance Minister Arun Jaitley have been pressurising LIC and SBI to pay more money and bail out ILFS. If the Modi government doesn't stop its trend of using the money belonging to the people only to protect its favourites, we will soon witness a situation like that of the Lehman Brothers collapse in the year 2008.
Nirupam also drew attention on the fact that many board members of ILFS have resigned from their posts. "The RBI had raised a red flag and pre-empted this crisis a few years ago. Why did the finance ministry refrain from taking any precautionary measures? What is the government doing to ensure that none of the members who have resigned become another Nirav Modi or Mehul Choksi?" Nirupam said.
ILFS has about $500 million in repayment. However, the firm has only $27 million available. It has put its corporate headquarters worth Rs 1300 crore on sale, it has also identified almost 25 projects for sale. The firm also plans to sell their assets and bring down the debt by almost Rs 30,000 crore, which comprises only one-third of the total amount. However, this process will take almost a year while the firm has $500 million in repayment which are due in the second half of this financial year. As of March 2018, LIC owns 25.34 per cent stakes in ILFS, making them the company’s largest stakeholder. It is followed by Japan’s Orix Corporation which has 23.54 per cent stakes in the company. Abu Dhabi Investment Authority, HDFC, Central Bank Of India and SBI hold 12.56 per cent, 9.02 per cent, 7.67 per cent and 6.42 per cent respectively.