Erasing early gains, the Bombay Stock Exchange benchmark Sensex fell by over 286 points on heavy selling by funds nervous about lending violations by some public sector banks in the housing-finance scam.
The Sensex, which had gained 97.08 points at the outset, rolled down by 286.66 points to 19,031.50 points in the first 90 minutes of trading following a sharp fall in realty and banking sectors.
In similar fashion, the broad-based National Stock Exchange index Nifty lost 89.25 points to 5,710.50 points.The market remained under pressure following a CBI probe into lending violation by some PSUs including LIC Housing Finance and Bank of India.
LIC chairman T S Vijayan on Thursday said a new CEO for its troubled arm LIC Housing Finance will be in place in the next few days, following the incumbent CEO Ramachandran Nair's arrest in multi-crore loan scam on Wednesday.
"Our first priority is to support LIC HFC at this point of time. Towards this we have appointed the senior most general manager Chandrashehakar as the acting CEO. He will be assisted by two other GMs. The process of appointing a new CEO is on and a CEO will be in place in the next two-three days", Vijayan told newsmen in Mumbai after an urgent board meeting of the country's largest financial institution.
Vijayan, who will be flying into the Capital on Thursday evening, also said LIC has set up an internal inquiry panel to look into the alleged wrongdoings by its senior officials, who were arrested by the CBI in the scam. He, however, he did not specify when the enquiry panel will submit its report.
Asked whether he has been summoned by the Finance Minister, Vijayan said, he has no appointment with the FM as of now and he is going to Delhi for an agents convention being held in Noida this evening.While asserting that there is no systemic failure in the company as its asset quality has not been impaired by these arrests or loan exposures, he said, "this is not a scam per se as the issue pertains to a few individuals and not about the company."
What would be the next step of LIC regard to these tainted officials, Vijayan said, that would depend on the internal inquiry report as well as what the CBI finds out. Whether the issue will impact LIC's investments and its assets, he replied in the negative, but said, it may have a sentimental negative impact. Whether he is worried whether these assets in question would become stressed assets, he quipped, "no, none of them are bad loans. I can assure you that all these loans are performing assets and also profitable assets."
On Wednesday, the CBI arrested LICHFC CEO Ramachandran Nair, LIC Secretary for Investment Naresh K Chopra and six other senior bankers in connection with a housing-finance racket.
Chopra has been with the LIC Investment department for two years. Other bank officials arrested by the CBI include Bank of India General Manager-Delhi RN Tayal, Central Bank of India director (chartered accountant) Maninder Singh Johar, and PNB deputy general manager-Delhi Venkoba Gujjal.
These officials were banned for allegedly taking bribes while sanctioning large scale loans to corporates, and for working in collusion with loan arranger firm Money Matters whose top management team--chairman Rajesh Sharma and two of its employees Suresh Gattani and Sanjay Sharma--was also arrested, and for overlooking regulatory guidelines for granting such approvals.Earlier in the day Vijayan told a business channel that "the CBI has requested for some files (relating to loans extended to some housing companies). The outstanding amount from these companies are Rs 380 crore."
When asked whether the real estate companies to which it had exposure were from Mumbai, Vijayan said, "some within Mumbai and some from outside."
CBI has named several realty developers in the first information report. They include Mantri Realty, Kumar Developers, DB Realty, Emaar MGF, Lavasa Corporation, Pashmina, Sigrun, Entertainment World, Indore City Treasures, Ashapura Minechem, BGR Energy, OPG Group, Adani, JP Hydro, JSW Power, Ralligear, Pantaloon, Adalite and Mtech.
Vijayan said LIC would put a team to ascertain whether the internal risk management system of the country's largest non-banking financial institution is in place.
"We will see whether the internal system needs tightening, whether risk management needs tightening and whether there was any procedural shortcoming," he said.
When asked if there is a possibility of LIC funds being used to subscribe IPOs or FPOs of real estate companies to support their stocks, Vijayan said, investments decisions are taken at the levels of MD and chairman.
He added LIC has already set up a team to find out the management level at which information about the firms that it would be investing in terms of IPOs or FPOs, could have been leaked out."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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The Sensex, which had gained 97.08 points at the outset, rolled down by 286.66 points to 19,031.50 points in the first 90 minutes of trading following a sharp fall in realty and banking sectors.
In similar fashion, the broad-based National Stock Exchange index Nifty lost 89.25 points to 5,710.50 points.The market remained under pressure following a CBI probe into lending violation by some PSUs including LIC Housing Finance and Bank of India.
LIC chairman T S Vijayan on Thursday said a new CEO for its troubled arm LIC Housing Finance will be in place in the next few days, following the incumbent CEO Ramachandran Nair's arrest in multi-crore loan scam on Wednesday.
"Our first priority is to support LIC HFC at this point of time. Towards this we have appointed the senior most general manager Chandrashehakar as the acting CEO. He will be assisted by two other GMs. The process of appointing a new CEO is on and a CEO will be in place in the next two-three days", Vijayan told newsmen in Mumbai after an urgent board meeting of the country's largest financial institution.
Vijayan, who will be flying into the Capital on Thursday evening, also said LIC has set up an internal inquiry panel to look into the alleged wrongdoings by its senior officials, who were arrested by the CBI in the scam. He, however, he did not specify when the enquiry panel will submit its report.
Asked whether he has been summoned by the Finance Minister, Vijayan said, he has no appointment with the FM as of now and he is going to Delhi for an agents convention being held in Noida this evening.While asserting that there is no systemic failure in the company as its asset quality has not been impaired by these arrests or loan exposures, he said, "this is not a scam per se as the issue pertains to a few individuals and not about the company."
What would be the next step of LIC regard to these tainted officials, Vijayan said, that would depend on the internal inquiry report as well as what the CBI finds out. Whether the issue will impact LIC's investments and its assets, he replied in the negative, but said, it may have a sentimental negative impact. Whether he is worried whether these assets in question would become stressed assets, he quipped, "no, none of them are bad loans. I can assure you that all these loans are performing assets and also profitable assets."
On Wednesday, the CBI arrested LICHFC CEO Ramachandran Nair, LIC Secretary for Investment Naresh K Chopra and six other senior bankers in connection with a housing-finance racket.
Chopra has been with the LIC Investment department for two years. Other bank officials arrested by the CBI include Bank of India General Manager-Delhi RN Tayal, Central Bank of India director (chartered accountant) Maninder Singh Johar, and PNB deputy general manager-Delhi Venkoba Gujjal.
These officials were banned for allegedly taking bribes while sanctioning large scale loans to corporates, and for working in collusion with loan arranger firm Money Matters whose top management team--chairman Rajesh Sharma and two of its employees Suresh Gattani and Sanjay Sharma--was also arrested, and for overlooking regulatory guidelines for granting such approvals.Earlier in the day Vijayan told a business channel that "the CBI has requested for some files (relating to loans extended to some housing companies). The outstanding amount from these companies are Rs 380 crore."
When asked whether the real estate companies to which it had exposure were from Mumbai, Vijayan said, "some within Mumbai and some from outside."
CBI has named several realty developers in the first information report. They include Mantri Realty, Kumar Developers, DB Realty, Emaar MGF, Lavasa Corporation, Pashmina, Sigrun, Entertainment World, Indore City Treasures, Ashapura Minechem, BGR Energy, OPG Group, Adani, JP Hydro, JSW Power, Ralligear, Pantaloon, Adalite and Mtech.
Vijayan said LIC would put a team to ascertain whether the internal risk management system of the country's largest non-banking financial institution is in place.
"We will see whether the internal system needs tightening, whether risk management needs tightening and whether there was any procedural shortcoming," he said.
When asked if there is a possibility of LIC funds being used to subscribe IPOs or FPOs of real estate companies to support their stocks, Vijayan said, investments decisions are taken at the levels of MD and chairman.
He added LIC has already set up a team to find out the management level at which information about the firms that it would be investing in terms of IPOs or FPOs, could have been leaked out."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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