In connection to the housing loan scam engineered by LIC Housing Finance, the government has said that total realty project loan exposure of both LIC and LIC Housing Fin is Rs 1600 crore, reports CNBC-TV18's Siddharth Zarabi quoting Finance Minstry sources.
Out of the Rs 1720 crore, both LIC and LIC Housing Fin’s exposure to eight realty companies that are currently examined by CBI is only Rs 388 crore, sources said.
Commenting that there is no cause of concern for realty exposure, Fin Min sources add that market reaction is just being overdone and out of proportion.
The Finance Ministry has issued fresh instructions to banks and financial institutions to examine their portfolio.
Below is a verbatim transcript of Siddharth Zarabi's comments on CNBC-TV18
Just a while back I spoke to a very senior Finance Ministry official and we now have for the first time the actual number that we are looking with regard to this project loan scam. I have it on record from the Finance Ministry saying that the total loans granted by LIC as well as LIC Housing Finance to the companies that are linked or named in this entire bribery scandal, master minded by a middle man is just Rs 388 crore.
You would recall that there have been different estimates floating in the market. But this is the first time we are picking up the number of Rs 388 crore and the Finance Ministry is now putting that in context by saying that LIC Housing Finance has a total project loan exposure of 12% of a Rs 44,000 crore book of which their NPA is only 0.08%.
Similarly LIC has a total exposure of Rs 1,332 crore and therefore the Finance Ministry says that there is no question of any systemic risk being attached. Even these loans are sufficiently secured with collateral and therefore there is no risk even for the amount Rs 388 crore that is being linked to this bribery scandal.
The second major thing that has happened today and we would recall yesterday is that the Finance Ministry said that instructions would go out to banks and to financial institutions to ensure and check their books. Today the Finance Minister at around 12:30 made it clear that he had given instructions that there should be no losses to investors.
We now learn that today afternoon instructions have gone to all banks and financial institutions asking them to double check, re-check their entire exposure, check their portfolio, look at the NPA, see if there are any issues and report back to the finance ministry over the weekend. The finance ministry expects that by Monday they will have the exact picture of what is going on.
In summary, for the first time we have a number that has been given to us officially by the finance ministry speaking exclusively to CNBC-TV18 that the total exposure of LIC and LIC Housing Finance to the 8 companies that are mentioned and have been spoken about with regards to this bribery scandal is only Rs 388 crore.
So they say that please do not overdo the market reaction and they clearly say that investors are perhaps getting hurt because the market reaction is being overdone and blown out of proportion. Finally they've said that investigations are on and if anything else emerges it will be shared in due course.
Source: www.moneycontrol.com
Thanks,
Gaurav Agarwal
Head Dealer
DENIP Consultants Pvt Ltd
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