Is LIC bailing out Debt-laden and Liquidity-strapped IL&FS?
In what could end up as one of the biggest bailouts in the financial sector, without portraying it as such, Life Insurance Corporation of India (LIC) is stepping in to 'take charge of' Infrastructure Leasing & Financial Services (IL&FS), an unlisted infrastructure behemoth with scores of complex subsidiaries, some of which are listed and a giant load of debt, the full details of which are not easily available in the public domain. It may be recalled that Ajay Piramal, a deal-hungry but astute acquirer, did a due diligence of IL&FS in 2015 but backed out. By then, even insiders felt its debt was getting out of hand. 
 
Hemant Bhargava, managing director of Life Insurance Corporation has taken over as IL&FS chairman at the last board meeting on Friday. A report in The Economic Times (ET) says that “LIC has tightened its grip” over IL&FS. The report says that LIC will “also be called upon to invest more to rescue the troubled company which is reeling under high debt and rating downgrades of key group firms.” 
 
Will LIC now bail out what is essentially a private entity (with some public sector shareholding), which has been allowed to grow into gigantic...
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COMMENTS

manoharlalsharma

2 months ago

the unsuitable job of government should be sold out to private players like one tack mahindra takenover the SATYAM or close down.

SuchindranathAiyerS

2 months ago

In India, the basic question is, "Whose life is it anyway?" Lives other than VIPs do not matter:

Elamaran R.

2 months ago

GOVERNMENT OF INDIA'S REAL TACTICS IS IN BACK STABBING LIC FOR STUBBORN INDIAN PUBLIC'S GENUINE AGITATION & TOUGH STAND AGAINST PRIVATISATION
TO GIVE THE CURRENCY MAKING TREASURE CHEST TO BE LOOTED BY CORPORATE HOUSES.

THIS TACTIC AGENDA WOULD DILUTE LIC IN LONGRUN.

TO STOP THIS ACTIVITY, LIC HAS TO BE PRIVATISED WITH SHARE HOLDING OF 95%
PERCENT HAS TO GIVEN TO INDIAN ORDINARY CITIZENS ONLY WITH CAPPING & NO OTHER CORPORATE ENTITY SHOULD BE
GIVEN RIGHTS TO TAKE THE SHARE HOLDING, THEN IN FUTURE, LIC WILL NOT PLAY ACCORDING TO THE WHIMPS & FANCIES OF INDIAN GOVERNMENT.

Rakshita

2 months ago

Informative and logical article. Just have one doubt. The last paragraph says that the Monorail project has been lying closed since November 2018? Does it mean 2017?

Ramesh Sampath

2 months ago

This article reminds us of the US financial system break down in 2008. It resulted in the global financial meltdown. It is not good for LIC to bailout and it may be doing what AIG of US did which caused undue stress on the economy.

Instead those who are responsible for the situation should be made accountable and shown legal consequences.

PALANIAPPAN Muthukumar

2 months ago

good article and thanks for exposing this ILFS group to the public

Indian securitisation market surged 128% to Rs32,300 crore in June quarter
The financial year 2017-18 witnessed one of the major reforms in the country, that is, Goods and Services Tax (GST). GST replaced the erstwhile central excise duty, sales tax and service tax laws, thereby changing the indirect tax regime entirely. This had large-scale implications as the country had been an unfortunate hostage to apprehension, uncertainty and overhaul of various economic models. The securitisation market in India was also affected by this change. Despite performing quite well in the first quarter of the last financial year, the market slowed down in the subsequent three quarters, which was mainly due to a difference in opinion with respect to applicability of the GST on the assignment of receivables. 
 
This issue was, however, settled by a set of frequently asked questions (FAQs) and answers from the GST Council on financial services. The FAQs compared assignment or securitization transactions with derivatives and hence termed it as a security for the purpose of GST laws. Under the current GST law, GST is not charged on securities. Therefore, vide these FAQs the confusion with respect to applicability of GST on assignment or securitization...
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surajit som

2 months ago

Some lay readers may find some terms difficult to understand. This is a common problem in Indian financial journalism. It seems to be addressed by one professional to another. They should think of lay readers and write for them.

Banks sign inter-creditor agreement on resolving NPAs: Goyal
Indian banks and financial institutions (FIs) on Monday entered into an inter-creditor agreement (ICA) to expedite the resolution of banks' non-performing assets (NPAs), or bad loans, and ensure smooth credit flow, acting Finance Minister Piyush Goyal said.
 
The agreement, as suggested by a committee headed by state-run Punjab National Bank (PNB) Chairman Sunil Mehta, is a "huge step forward" towards resolving the stressed assets issue and has been worked out under the Insolvency and Bankruptcy Code (IBC), Goyal told reporters here on the sidelines of a convention here organised by the Confederation of All India Traders (CAIT).
 
"Almost the entire banking system and prominent NBFCs (non-banking finance companies) like REC, PFC are joining the ICA which has held back fast and effective resolution of stressed assets for decades in the past.
 
"This is a huge step forward. It is a historic occasion for the banking system and is absolutely not a parallel system. This is within the framework of IBC that the entire process has been worked out and it will help in faster resolution within extant guidelines and rules," he said. 
 
The ICA is being...

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