LIC to conduct internal enquiry into housing-finance scam
LIC today said it will consider an internal enquiry at the company regarding arrest of its senior officers in connection with a multi-crore housing scam.india Updated: Nov 25, 2010 20:54 IST
LIC on Thursday said it will consider an internal enquiry at the company regarding arrest of its senior officers in connection with a multi-crore housing scam.
While asserting that there was no systemic failure in the company, LIC Chairman T S Vijayan told CNBC TV 18, "We are trying to have an internal enquiry into this matter. Our asset quality has not been impaired."
On Thursday, the Central Bureau of Investigation (CBI) had arrested the CEO of LIC Housing Finance, Ramachandran Nair, LIC Secretary (Investment) Naresh K Chopra and six other senior bankers in connection with a housing-finance racket.
The official (Naresh K Chopra) has been with the LIC Investment department for two years.
The officials were arrested on allegations that while sanctioning large scale loans to corporates, they were working in collusion with loan arranger firm Money Matters and overlooked regulatory guidelines for granting such approvals, for their individual monetary gains.
"CBI has requested for some files (relating to loans extended to some housing companies). The outstanding amount (from) these companies were Rs 380 crore," Vijayan said.
When asked whether the real estate companies to which it had exposure were from Mumbai, Vijayan said, "some within Mumbai and some from outside."
CBI has named several real estate developers in the first report. They include Mantri Realty, Kumar Developers, DB Realty, Emaar MGF and Lavasa Corporation.
Vijayan said LIC would put a team to ascertain whether the internal risk management system of the country's largest life insurance company was in place.
"We will see whether the internal system needs tightening, whether risk management needs tightening and whether there was any procedural shortcomings," he said.
When asked if there was a possibility of LIC funds being used to subscribe the IPOs or FPOs of real estate companies in order to support their stocks, Vijayan said, investments decisions were taken at the levels of Managing Director and Chairman.
He added that LIC had already set up a team to find out the management level at which information about the firms that it would be investing in terms of IPOs or FPOs, could have been leaked out.
Our exposure to companies is nominal, only 11% and majority of borrowing are at individual level and NPA quality is also good, Vijayan said.