Finance Minister Pranab Mukherjee on Saturday assured investors in LIC that they would not lose any money because of the housing finance racket involving the CEO of the state-run insurer’s subsidiary, LIC Housing Finance Ltd, and other top bank officials.

Asserting that those officials involved in the racket would not be allowed to escape, he said, “There is no cause for any anxiety for investors as not even a single paise would be lost by them due to an aberration of one or two officers in the organisation.”
“LIC is very strong and stable. It is too big an institution and its smooth functioning will not be affected by aberrations of one or two officers of the organisation”, Mukherjee said while inaugurating the 109th divisional office of LIC in Thrissur.

The Minister said no guilty person would be allowed to escape from the process of law and stern action would be taken against them.

Earlier this week, CBI arrested top officials of LIC and its affiliates as also other banks and financial institutions for granting corporate loans in lieu of grafts.

On Saturday in New Delhi, the finance minister had asked lenders, which have exposure to the estimated over Rs 1,000-crore in dubious deals unearthed by CBI, to ensure their money is safe, while state-run insurer LIC termed it is a case of bribe not a scam.

Mukherjee said there were several “doubting Thomases” over bringing the private sector to the insurance business on the assumption that Life Insurance Corporation (LIC) could not compete with the private sector in such a scenario.

Their predictions had been proved wrong, considering LIC’s growth. If LIC had grown by 20 per cent during the decade before liberalisation, it had grown by by 27 per cent in the post liberalisation period, he said.

Maintaining that Indian financial institutions are strong and stable, Mukherjee said many major banks had collapsed in the USA and the European Union following the global economic meltdown two years ago and “millions and millions of dollars” of investors had been lost in those countries.

India, however, withstood the meltdown without burdening taxpayers as banks and other financial institutions were very strong and stable, he said.

Mukherjee said LIC Housing Finance Services Limited had disbursed over Rs 44,000 crore as loans so far, while loans to builders worked out to only 11.8 per cent. The non-performing assets stood at 0.08 per cent, he added.

Mukherjee said that when 14 private banks were nationalised in 1966 by the then Prime Minister Indira Gandhi, there were only 8,000 bank branches in the country and now there are 87,000 branches.

He said the main objective of the development process is to attain inclusive growth by bringing a large number of people into the mainstream of growth.

The process was on through empowerment and legal enactments like the National Rural Employment Guarantee Act, Mukherjee said.

He stressed upon the need to attain inclusive growth as part of development, saying 63 per cent of the population was still out of any kind of financial services.