A day after the Board of Insurance Regulatory and Development Authority of India (Irdai)permitted the State-owned major Life Insurance Corporation (LIC) to acquire up to51 per cent stake in the debt-ridden public sector bank IDBI, the Opposition, including the Congress and the Left, cried foul over the move, accusing the Narendra Modi governmentof allegedly forcing the LIC to take over the bleeding PSB while using the savings of millions of common people in their life insurance policies.

The Congress party Saturday charged that the “hardearned savings” of 38 crore LIC policy-holders would be jeopardised by “burdening them with the Rs 13,000 crore bailout package” required for the LIC to take over the debt-stressed IDBI.

The Congress’s spokesperson Priyanka Chaturvedi alleged that the Modi dispensation was flouting various banking and insurance laws since “as per the law, LIC cannot invest more than 15% in IDBI”.

The Congress pointed out that the IDBI Bank is the “worst performing public sector bank whose Q4 losses have swollen to Rs 5,663 crore and gross non-performing assets (bad loans) to a whopping Rs 55,588.26 crore”. The party said, “It is not fair for LIC’s policyholders to find their money funnelled into sick banks”.

Chaturvedi also asked, “If this deal goes on, wouldn’t the flood gates of similar deals of LIC bailing out other bleeding public sector banks be opened? More than half of the PSBs are having precarious financial position given that this quarter alone banks have suffered a loss of Rs 87,500 crore. Is Modi government going to do the same for all banks?”

The CPI-M Politburo asked the Modi government to rescind its decision to ask the LIC to bail out “the worst NPA defaulter bank” IDBI. In a statement, the CPM condemned the government’s move, saying that “The LIC is the repository of people’s savings in the form of insurance policies. Using this capital to bail out the worst defaulter bank is tantamount to public loot of people’s savings.”

The CPM Politburo said, “The names of the rich defaulters are kept as a secret by the Modi government. Instead of recovering the loans from the defaulters, they are being bailed out by people’s savings deposited in insurance policies.”

The CPM said the LIC is investing Rs 13,000 crores for this proposed “take over” of the IDBI Bank. This money should have been invested to give the policy holders a better return, the party said, adding “Instead, it is being used to bailout the defaulters”.

“This is crony capitalism of the worst kind. The rich can loot and scoot but the common Indian will pay back their loans from their savings,” the CPM said.

“The LIC is not mandated to enter the banking business. This Modi government is forcing a sudden change in the rules. The regulatory mechanism is being destroyed by this government to protect the rich defaulters from repaying their loans,” the CPM Politburo charged.