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Thursday, November 25, 2010

LIC exposure in scam only Rs 380 cr;cooperating with CBI:CMD

India's largest insurer LIC today initiated an exercise to check its risk management system, while asserting that its assets were not impaired by the housing finance scam involving some of its top officials.

Asserting that there was no systemic failure in the company, LIC Chairman T S Vijayan said, "We are trying to have an internal enquiry into this matter. Our asset quality has not been impaired."

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The outstanding to the contentious real estate companies from LIC Housing Finance was Rs 380 crore, and LIC was providing all the relevant information to CBI for its investigation into the scam, he said.

Vijayan said he has already briefed the government about the latest developments within the company.

Yesterday, the CBI arrested eight top officials from banks and financial firms on charges of taking bribes to grant corporate loans.

"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.

The insurer also convened an urgent board meeting to take stock of situation after arrest of Ramachandran Nair, CEO of it housing finance entity, and Naresh K Chopra, LIC's Secretary (Investment) on charges of involvement in loan bribery case.

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"Chandrasekhar who is the senior most general manager at the LIC Housing Finance will be the officiating CEO of LIC Housing Finance," Vijayan said after the Board meeting, adding he would be assisted by two other General Managers.

"The process of finalising a new CEO is on. And will be appointed in the next 2-3 days," he added.

When asked where the real estate companies to which it had exposure are based, he said, "some within Mumbai and some from outside."

CBI has named several real estate developers in the first report including Mantri Realty, Kumar Developers, DB Realty, Emaar MGF and Lavasa Corporation.

"We will see whether the internal system needs tightening, whether risk management needs tightening and whether there was any procedural shortcomings," he said.

He added that LIC had already set up a team to find out at what level information about investing in terms of IPOs or FPOs, were leaked.

Our exposure to companies is nominal, only 11 per cent, and majority of borrowing are at individual level and NPA quality is also good, Vijayan said.

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