Chotu was watching Germany doing its best to crash out of the World Cup when his mobile phone sprang to life flashing Motu’s name.

Kya haal hai Motabhai, not watching the World Cup?

Arrey nahin Chotu, I happened to read something disturbing about IDBI Bank where I have all my deposits. I believe it’s in trouble?

All banks, especially the government-owned ones, are in trouble today. So what’s new with IDBI Bank?

Well, Chotu, IDBI Bank is getting a new jeevan saathi I believe..

Stop punning and tell me the news Motu...

LIC is putting in money into IDBI Bank and acquiring its shares. I want to know what it means for me?

It means that you, the depositor, is being covered. Your money is safe.

But Chotu, the newspapers, including BusinessLine , are criticising it...

Yes, Motu, that’s because it is not such a bright idea from LIC’s point of view. IDBI Bank has posted massive losses and it has a high share of bad loans in its portfolio.

Haan , but I believe LIC is loaded with cash and it has invested in about nine banks already. How does one more matter?

Motabhai, it is true that LIC has tonnes of cash but that is not meant to be sprayed around on troubled banks to bail them out. This money belongs to policyholders and has to be invested prudently. LIC’s investments in banks till now have been voluntary.

So you mean the investment in IDBI Bank is a forced one, Chotu?

Of course, why will LIC otherwise spend money on an ailing bank?

But what’s wrong if it helps out in rescuing a bank in trouble? After all, the owner of LIC and IDBI Bank is the same...

Indeed, from the owner’s perspective it is a neat solution to transfer cash from a healthy unit to a troubled one but the problem is that it doesn’t take into account the views of the former. And importantly, this is not the first time that LIC is being “used” this way by its owner.

You mean, Chotu, LIC has made a business out of investing in other ailing businesses of its owner?

Oh come on, LIC is not a “bad bank” where all the stricken assets can be parked but it is a fact that LIC has been asked to pick up shares of other government companies earlier. ONGC’s disinvestment five years ago is a prime example.

Chotu, I have a serious doubt. LIC’s logo says yogakshemam vahamyaham , which roughly translates into “we’re responsible for your welfare”...

So?

So what’s wrong if LIC works for the welfare of its owner? The logo anyway does not say whose welfare....

Motabhai, it must be something to do with the dollops of desi ghee that you gulp down every day, but only your mind can think like this... LIC’s motto is aimed at us, the people, who are its prospective customers for life insurance, samjha ?

Ok smartie, you still haven’t told me how this will affect LIC.

Simple, Motu. LIC invests the money from its policyholders to generate returns from which it can pay off claims and also make a profit. Imagine what will happen if it invests in dud companies where it will not only get zero return but even risk losing its capital?

Oh my God, got it now. Isn’t there an insurance company where LIC can take a policy for itself, preferably a Jeevan Suraksha?

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