After picking 51 per cent stake in ₹12,000 crore sometime back, LIC has asked IDBI bank to sell its policies through all the 1,890 branches of the bank.
Not only that, the country’s insurance behemoth has fixed the target for the bank to achieve.
In fact, the bank sold more than 18,000 policies, accumulating the premium to the tune of ₹50 crore on Day 1 (ie on March 01) through all the branches of IDBI Bank. Not to mention that LIC has already picked up 51 per cent stake in the bank and thus the country’s largest investor in the market has become a majority stakeholder of the bank.
Enthused by the massive responses on day one, the LIC has instructed the bank to sell its policies worth ₹200 crore by the month-end, March 31 in the current FY’19, and ₹10,000 crore over next five years.
“This is the way the public money is being looted by LIC, by forcing the officers of IDBI Bank to sell LIC policies,” said an official of the bank.
In fact, the LIC is focusing much on bancassurance channel for sale of its policies.
On February 16 this year, senior officials of IDBI Bank were instructed by a senior official of LIC through a letter to focus on the bancassurance business of the insurer in the LIC-IDBI Bank partnership plan.
“As LIC has completed the acquisition of 51 per cent stake in IDBI Bank earlier this year, the bancassuarance would be the main focus area of LIC in the partnership. We are planning to launch the bancassurance business on March 1, 2019, in IDBI Bank branches,” the letter, written by the managing director said. A copy of the letter has been accessed by this correspondent.
“Our understanding with the bank is that it will bring in ₹200 crore of premium in 2018-19, ₹10,000 crore premium in the fifth year. The mapping of all 1,890 branches of IDBI Bank with 1,232 branches of LIC has been completed, based on the details received from each zone,” the letter said.
The public money is being looted openly by forcing the poor people to buy unwanted policies. It is a fit case of misspelling because all the LIC agents, put together across the country, could not have achieved such a feat.
Most of the policies were sold to house-keeping staff, workers on contract and security guards. This is sheer loot of public money. They are not able to run their homes with the meagre monthly earnings but fully knowing this they were forced to buy policies, the official said.
An official of the bank said on the condition of anonymity that first few officials of the bank purchased the LIC policies and then they forced the lower-rung contractual staff to go for that. In this way, a good number of policies of LIC are suspected to have been sold, the official said.
Secondly, IDBI Bank has its own life insurance arm, IDBI Federal. Nobody knows that what will happen to the life insurer which had been selling its policies through the IDBI Bank branches until now. Experts believe that it all must have been done under some political pressure imposed by the people sitting in the corridors of power.
As per norms, a single promoter can’t have two life insurance ventures at a time. However, after becoming the majority shareholder in IDBI Bank, LIC is suspected to have been in that position.
While talking to media recently in Mumbai, IRDAI chairman, SC Khuntia had only said, “LIC will have to pare its stake in IDBI Bank from 51 per cent at present to 15 per cent over a period of time.” However, he was quick to add that the regulator was yet to give the timeline by which LIC will have to pare its stake.
This is the way the public money is being looted by LIC by forcing the officers of IDBI Bank to sell LIC policies. The public money is being looted openly by forcing the poor people to buy unwanted policies. It is a fit case of mis-selling because all the LIC agents put together across India could not have achieved such a feat.
An official of the bank said that as the bank has already made a commission of Rs 8 crore by the sale of LIC policies through its branches so far, we want that the amount should be used by the bank in the buyback of its stake from LIC so as to bring down the majority shareholding of LIC in the bank.
In another development, the share prices of IDBI Bank have come down to ₹44 per share, compared to ₹61 per share when 51 per cent stake was purchased in the bank by the LIC.
2018-19 -------- ₹200 cr
2019-20-------- ₹1000 cr
2020-21-------- ₹2500 cr
2021-22-------- ₹10,000 cr