Money & Banking

LIC itself has bad loans of well over ₹12,000 crore

Radhika Merwin BL Research Bureau | Updated on January 20, 2018

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While a lot has been said about the rising bad loans of banks, India’s leading life insurer, Life Insurance Corporation (LIC), has non-performing assets (NPAs) of its own to worry about.

According to LIC’s 2014-15 annual report, it had gross NPAs amounting to 3.3 per cent (₹12,230 crore) of its total “debt” (the term it uses). This had risen to 4.23 per cent as of December 2015. These figures are close to those reported by a few banks during the December quarter — SBI (5.1 per cent of loans), ICICI Bank (4.7 per cent), Syndicate Bank (4.6 per cent) and Vijaya Bank (4.32 per cent).

LIC’s bad loans have been steadily rising over the last five years. In 2010-11, its GNPAs were at just 0.95 per cent. LIC’s total “debt” of about ₹3,70,625 crore as of March 2015, is actually higher than HDFC Bank’s loan book of about ₹3,65,495 crore in the FY15 fiscal.

Aside from its investments in debentures and bonds, LIC has extended loans to the Centre and State governments, banks and financial institutions and companies, which amounted to about ₹1 lakh crore as of March 2015.

Legal route

Like banks, the insurer also appears to be taking legal recourse to recover its mounting bad loans. According to data published by the Credit Information Bureau of India (CIBIL), LIC has filed 70-odd cases against defaulters who owed it about ₹8,200 crore as of December 2015 (in the case of loans above ₹1 crore). Among its top defaulters are Deccan Chronicle, Hamco Mining and Smelting, Punjab Wireless, Tulip Telecom and Padmini Technologies. The insurer has filed these cases only in the last 12 months, as a last resort to recover loans. As per the CIBIL data, LIC did not file any cases until March 2015, when its defaulters owed it about ₹1,700 crore.

Published on May 02, 2016

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