Companies & Sectors
Builders may have benefited from fake home loans of LIC Housing Finance and banks

LIC Housing Finance and banks are suspected to have given fake loans to individuals which landed in the accounts of a few builders. The deals were supposed to have been arranged by FII-funded Money Matters Financial Services

Following the raids by the Central Bureau of Investigation (CBI) on Money Matters Financial since last night, news that was broken by this website early today (Money Matters Financial raided by Central Bureau of Investigation), the CBI conducted raids on LIC Housing Finance (LICHF) and three banks during the day.

The CBI said it busted out a racket where a private financial services company, its chairman and managing director (CMD) and other associates were bribing senior officials of public sector banks and financial institutions for facilitating large scale corporate loans. They were also gathering confidential business information from financial institutions.

Officers of top management and middle management of various public sector banks and financial institutions, Bank of India (BoI), Central Bank of India (CBoI), Punjab National Bank (PNB), Life Insurance Corp of India (LIC) and LICHF were receiving illegal gratifications from the private financial services company who were acting as mediators and facilitators for corporate loans and other facilities from financial institutions, the CBI said in a release.

The investigation agency said it arrested R Ramchandran Nair, chief executive-LICHF, Naresh Chopra, investment secretary-LIC, RN Tayal, general manager-BoI, Maninder Singh Johar, director-CBoI, Venkoba Gujjal, deputy general manager-PNB as well as Rajesh Sharma, CMD-Money Matters and Sanjay Sharma and Suresh Dattani, both employees of Money Matters. All the eight arrester persons are remanded to custody till 29th November, CBI said.

Moneylife learns that officials of LICHF, BoI, CBoI and PNB had given out housing loans to a few hundred individuals, who were dummy borrowers. These borrowers existed only paper and were propped up by a few builders. The money was then transferred from the accounts of these individuals to these builders. It also appears that LICHF was charging a high rate of interest for these fake loans which was reflected in higher profits.

Driven by high profits over the last few quarters, the LIC Housing Finance stock has been a spectacular performer over the last 20 months. From a low of Rs178 at the end of March 2009, the stock had hit Rs1,496 on 29th September this year, a rally of over 1000%. Over the same period, market leader Housing Development Finance Corporation (HDFC) rose from a low of Rs223 to a high of Rs780, a gain of 350%.

As rumours of the LIC HF scam surfaced, the stock took a big battering. By the end of the day, it was down 18% and there were no buyers for the stock. Since the Moneylife report early morning, the Money Matters Financial stock too was sold heavily during the day and the stock was locked in the lower circuit. It appears that the cases of Money Matters and LIC HF and the banks are linked. CBI suspects that Money Matters was arranging these deals between the banks and the builders. According to our sources, bank officials and others were being gifted 2 kilograms of gold this Diwali.

It may be recalled that less than two months ago, Money Matters raised more than Rs400 crores foreign institutional investors, a deal arranged by India Infoline. 



Rajkumar Singh

5 years ago

Many thanks are overdue to Moneylife and always for its painstaking investigative journalism.

But on the other hand I am a bit confused and suspicious.

Ever since I followed the articles of Madam Sucheta Dalal, I never became a gullible or innocent investor?

Thanks once again for aligning and making me a member of your organisation.

Shibaji Dash

7 years ago

Thank you Mr. Basu for such quick and investor-friendly response that also serves larger public interest.The upswing of the ' high' of LIC HFC between Jan 2010 at Rs. 855/- and Rs. 1305/- in October 2010 as well as the corresponding "low' and ' close' price ( per BSE 'Archive' ) prior to the CBI action , will remain unfathomable unless and until the realty is unravelled and put in the public domain by the authorities concerned. concerned.

Shibaji Dash

7 years ago

In doing the 20 month comparative at Para 7 of the commentary, the Moneylife Digital Team, one hopes, has reckoned with the fact that HDFC split its share from Rs. 10/- to Rs. 2/- wef 21August 200 while the FV of LIC HFC share continues to be Rs. 10 ; that summarily speaking but for the split the current market price of HDFC share should have been in the range of 5 times what it is( ie Rs 3000/- to Rs 3500/-) ; that the Quarter 2 net profit of LIC HFC rose by 37% to Rs 234.21 crores ; that the EPS of HDFC for March 2010 ( before the split ) was 19.69 where as the EPS of LIC HFC for the same period was 69.75. These infos are available in the websites of both the companies and @ (money).My insstantaneous comments 1 hour ago needs to be read down accordingly. This is no defence for any one. The investigation commenced by the agencies/regulators must be expeditiously but impartially concluded to punish the guilty as per procedure established by law . In the event of delay or silence the very timing and objective of the enforcers may come under avoidable scrutiny. Pl. see the views of Mathur/ Lata Venkatesh/ Singvi @


Debashis Basu

In Reply to Shibaji Dash 7 years ago

We always use split and bonus adjusted prices. This available automatically from the software on price data that we buy.

Shibaji Dash

7 years ago

The comparative of upswing in share prices of HDFC and LIC HF in the 7th para of the commentary of Moneylife Digital Team is stunning indeed warranting extensive and intensive research by all the regulatory and enforcement agencies to understand the phenomenon and uncover the truth- though a 20 month time frame may be an arguable proposition. Until now HDFC is known for the genuine due diligence they do in tying up any loan contract. One feels so sorry to see the name of LIC, the principal, being enmeshed in such a smelly controversy, perhaps the 1st one after the Chagla Commission inquiry((popularly then known as the Mundhra scandal) in the fifties of the twentieth century.


7 years ago

LICand its subsidiary LICHF had a vwery good reputaion and clean image Few officials tempted by money matters have spoiled that for peanuts It is shameful for those offiers involved.Media is giving big publicity and stock market was over reacting on this issue

Shibaji Dash

7 years ago

If you charge interst @ 8 and 1/2 % from ' individuals borrowers ' and 19% from the builders, you are providing a leveraged incentive for builders to forge documents. And with the criminal justice administration being ineffective fear of conviction & imprisionment is nonexistent. Remember the loot from the differential between price of levy sugar and open market sugar. For that matter, mixing of kerosene with diesel or petrol ? Incidentally, what's the status of the accused in the Harshad Mehta case , now that nearly 2 decades have lapsed since it happened?


ca sunil mone

In Reply to Shibaji Dash 7 years ago

sir i want your res address so that i can send you some corrospondence of interest. even office address will do. ca sunil mone


In Reply to Shibaji Dash 7 years ago

India will be the No 1 nation, leading the leadership of Corruption. Out of 16 CJs, 8 are corrupt, so what we can expect out of the Judiciory.


7 years ago

Axis Bank is a fat balloon with an overexposure to Infrastructure projects including that of HCL, Lavasa, Suzlon, Alok Ind, Mundra Port and few other big names in construction industry. Look at its recent deal with ENAM

CBI should conduct the inquiry against the Ex DMD and other senior officials including the present DMD, Executive Directors, Board of Directors, and President - Risk for their vested interest in financing to this project and holding disproportionate wealth they have accumulated in their family members name.

Money Matters Financial Directors including other officials Mr Pawan Bansal ( ex employee of Axis Bank as reported in today economic times ) and company accounts are being operated through Axis Bank

CBI Economic Offence Wing is already doing the inquiry in to similar type of fraud in Priority sector lending of 150 crores at Bhopal and Jabalpur and also at other major centers.

They were also involved in multi crore contract farming fraud similar to LICHF i.e landing on a fake KYC documents without the existence of that person. The bank has 1200 plus crores of exposure to Microfinance Companies which is deteriorating its asset quality.

The senior functionaries of the banks are putting up papers or they are being moved to other non performing departments. One side the bank is giving the suspension / termination letters to employees and other side they are accepting the resignation letters from those suspended senior employees and giving them relieving letter. Its an eyewash to the general public, and our role is to educate the investors and protect their interest. Its upto you to take a call.

R Govindarajan

7 years ago

Thinking that lichf would go up, I have bought some shares of it. Will there be any chance for the share to reach back to the up trend position or not is the only bothering thing to me.
If i am able to get some valuable views, it would be of great use to me.


nn bala

In Reply to R Govindarajan 7 years ago

It depends on your risk appetite. If you have limited risk appetite, sell your shares as soon as the market opens up tomorrow. This way you can minimise the loses. Else you may have to wait for a long time. Satyam shares touched Rs 12 when the scam broke out and it has taken about 2 years to reach the level of around Rs 100.


In Reply to nn bala 7 years ago

One of the leading private sector banks has overexposed itself by financing various Infrastructure projects including that of LAVASA. CBI should conduct the inquiry against the Ex DMD and other senior officials including the present DMD, Executive Directors and President - Risk for their vested interest in financing the project and holding disproportionate wealth they have accumulated in their family members name

NN Bala

7 years ago

Many stock market experts have been recommending to buy the LIC Hsg Fin stock over the last 1 month !!!


7 years ago

Which is the next financial institution after LICHF? Is it not the Private Banks?

Bankers have gone beyond the Laxman Rekha, with a sole aim to create personal wealth by over financing the corporate and individuals by adopting all types of unethical and fraudulent practices. Lets wait and watch how long they will be able to escape from the scanners of CBI, EoW & CVC, as the Bank Management has failed to implement the concept of Staff Accountability and Corporate Governance in its true spirit since inception and they want to loot the investors / depositors money for personal benefits.

"Every year, I used to see 20,000 HIV patients. Maybe because I am a woman I could understand the human issues better"

From a secondary school education in a class that was a side-room of a temple at Peth-Wadgaon in...

Premium Content
Monthly Digital Access


Already A Subscriber?
Yearly Digital+Print Access


Moneylife Magazine Subscriber or MSSN member?

Yearly Subscriber Login

Enter the mail id that you want to use & click on Go. We will send you a link to your email for verficiation
Wednesday Closing Report: Still range-bound, with a downward bias

The market opened on a strong note this morning but sideways trading, coupled with across-the-board selling, dragged the indices lower at the end of the session.

The local market opened higher this morning, brushing aside concerns about tensions in the Korean peninsula and the global economy. Jittery trade saw the indices dipping into the red for a brief period in morning trade. They soon bounced back to touch the day's highs but range-bound trading led to a sharp decline towards the close.

Finally, the Sensex closed 231.99 points (1.18%) lower at 19,460. The bellwether index touched a high of 19,835 and a low of 19,376, intraday. The Nifty was down 69 points or 1.16% at 5,865. The index oscillated between a high-low of 5,976 and a low of 5,833 during the session.

The market breadth was negative today. The Sensex had 25 declining stocks against five gainers while the Nifty settled with 44 stocks in the green and six gainers. Among the broader indices, the BSE Mid-cap index lost 1.11% while the BSE Small-cap index shed 0.56%.

The top gainers in the 30-share Sensex list were Mahindra & Mahindra (up 3.23%), Bharti Airtel (up 0.76%), Tata Steel (up 0.54%), ITC (up 0.41%) and Tata Motors (up 0.32%). The losers were led by State Bank of India (down 3.34%), DLF (down 3%), BHEL (down 2.74%), ICICI Bank (down 2.73%) and HDFC Bank (down 2.67%).

BSE Fast Moving Consumer Goods (up 0.24%) and BSE Auto (up 0.05%) were the only gainers in the sectoral space today. The sectoral losers included BSE Bankex (down 2.94%), BSE Realty (down 2.88%), BSE PSU (down 1.84%), BSE Capital Goods (down 1.21%) and BSE IT (down1.06%).

In a move that could make it difficult for corporate entities to set up stock exchanges, a Securities and Exchange Board of India (SEBI) committee on Tuesday recommended that only banks and public financial institutions could be anchor investors in bourses and stopping them from listing or making huge profits.

According to industry sources, the recommendations would make things difficult for FTIL group-founded new bourse MCX-SX, which is allowed to trade only in currency futures, and its plea for trading in equity and other segments has already been rejected by SEBI.

Markets in Asia ended mixed on profit-booking, reacting to tension between the two Koreas, and on fears that more members of the European Union might face debt issues. The Chinese market ended higher as investors there resorted to bottom fishing.

The Shanghai Composite jumped 1.12%, the Hang Seng gained 0.56%, the KLSE Composite was up 0.07%, and the Straits Times rose 0.34%. On the other hand, the Jakarta Composite fell 0.53%, the Nikkei 225 was down 0.84%, the Seoul Composite lost 0.15% and the Taiwan Weighted declined 0.38%.

The US markets closed sharply lower on Tuesday following tensions after North Korea fired artillery shells at a South Korean island. In economic news, the Federal Reserve on Tuesday revised its economic growth forecasts downwards for next year. Besides, a fall in sales of existing homes in October made investors wary of the pace of economic growth in the world's largest economy.

The Dow tumbled 142.21 points (1.27%) to 11,036. The S&P 500 shed 17.11 points (1.43%) to 1,180. The Nasdaq declined 37.07 points (1.46%) to 2,495.

Inflows from domestic institutional investors were offset by outflows by foreign institutional investors on Tuesday. The latter pumped in Rs1,503 crore in the equities segment while the latter pulled out funds worth Rs1,493 crore yesterday.

Tata Power (down 0.73%) plans to invest Rs850 crore till FY12 to beef up generation, transmission and distribution, a senior company official told reporters.

The company will invest Rs850 crore over three years (FY10 till FY12) to enhance its generation, transmission and distribution capabilities, said Tata Power's executive director-operations, S Padmanabhan.

Yes Bank (down 2.15%) and Shinsei Bank of Japan today signed an agreement to advise companies on cross-border deals between the two nations. The alliance will play an active role towards further augmenting investment flows into the Indo-Japanese corridor, a Yes Bank statement said.

It added the tie-up will enable both banks to leverage their combined expertise, strong local knowledge and excellent corporate relationships to jointly pursue M&As, JVs and merchant banking opportunities.

Punj Lloyd (down 1.16%) has bagged three contracts worth Rs 1595 crore. The first one is from Oil Corporation which is worth Rs 1123 crore. The second order is from Harouge Oil operations in Libya worth Rs 288 crore and the third order worth Rs 184 crore is from West Bengal Medical Service Corporation, a wholly owned undertaking of the government of the West Bengal.


We are listening!

Solve the equation and enter in the Captcha field.

To continue

Sign Up or Sign In


To continue

Sign Up or Sign In



The Scam
24 Year Of The Scam: The Perennial Bestseller, reads like a Thriller!
Moneylife Magazine
Fiercely independent and pro-consumer information on personal finance
Stockletters in 3 Flavours
Outstanding research that beats mutual funds year after year
MAS: Complete Online Financial Advisory
(Includes Moneylife Magazine and Lion Stockletter)