Sensex at 19.3K, do you think Rs 1000cr made it happen

[indexed]

Realty and banking stocks took a beating on the bourses today as
LICHF, PNB Central Bank, Bank of India housing finance loan scam was
exposed. CBI sources say that five companies involved in the scam took
loan of Rs 1000 crore,

It is learnt that companies took loan to invest in stocks and
manipulate share price . Sources also add that a company took loan of
Rs 560 crore, another borrowed Rs 300 crore while rest of them took
loan of Rs 50-60 crore.

Now CBI will write market regulator SEBI asking it to investigate the
role played by these companies. If need be these companies can even be
blacklisted for taking money in the name of housing loan and then
diverting it to manipulate share prices.

Sources also add that there are six other officials from various
public sector banks who are on CBI’s radar whose role is being
investigated vis-à-vis this housing loan scam and in the next few days
we can see more arrests in this case.

Most of the banks have given these loans after proper verification.
They already held a good amount of collateral with them for the loans
that they had disbursed. From that point of view, we don’t see too
much of a problem of them giving a loan and it turning bad.


What has happened is that somebody has taken advantage of the system,
in probably expediting the process by way of extracting money out from
the banking system faster, to complete the land acquisition buy and
that is where these things have backfired.

Otherwise, this bribery has been going on in this particular sector
for many years. It’s not the first time that we are seeing this.
Probably it has come on the surface this time around and that is why
we are all shocked. More importantly, the banking sector has not been
found doing something which they should not have been doing.

At the same time, real estate companies have been taking this kind of
money from banks by paying extra money to get the process done faster.
In my view point, the corporate workings are not going to get affected
beyond a point. Maybe some process may get delayed including
sanctions. That is where one might see some amount of hiccups. But
beyond a point, I don’t see corporate workings getting affected either
on the realty or on the banking side.

Life Insurance Corporation and LIC Housing Finance have been in focus
since the news of a large scale multi-crore scam broke out. In a bid
to clear Life Insurance Corporation's name from the murky dealings,
the company's Chairman TS Vijayan relegated the matter to individual
misconduct and denied having any kind of system failure.


LIC do not have any sensitive information about corporate houses. As
far as LIC Investment Department is concerned, if anyone comes for a
loan or equity investment, it’s based on published information. There
cannot be anything like confidential information that any company
shares with us that is to be shared with other outside people. I don’t
think so.

LIC has representatives in some of the companies of course but those
things are taken in at a different level if at all report come. If any
exceptional things come in the board, they do report but it is in a
different level, it’s not at secracy level

Investment decisions to equities are taken on the basis of both the
research report and operations at very extremely senior level and the
information, once the decision is taken for implementation, it might
go down but decisions are not influenced by any of these things.