Lender of last resort: LIC sees largest default from borrowers

MUMBAI: Life Insurance Corp (LIC), the country’s largest insurer, witnessed the largest default of `65,700 crore from its borrowers till December 2015, according to website Newslaundry.

The website on Tuesday released the names of the top 10 defaulters from the list of RBI’s Wilful Defaulters and Defaulting Borrowers List. The list places corporate bad debts in the banking system at `5 lakh crore as of December 24, 2015.

Unlike banks and other institutions, LIC does not typically give loans. The governmentowned insurer normally buys debt instruments — bonds or debentures — from companies that want to raise money for long-term needs. LIC is also the second-largest shareholder in government banks.

Vinay Rai-promoted pig iron maker Usha Ispat, the top corporate defaulter on the list, owes `8,619 crore to LIC. Another major defaulter, Prakash Industries, owes more than `2,171 crore.

Quoting J Hari Narayan, former chairman, Insurance Regulatory and Development Authority (IRDA), Newslaundry said LIC works “under very tightly guarded investment rules”, and Narayan suspected that “these were investments made prior to IRDA.” The IRDA was set up in April 2000. The RBI list notes defaults triggered between 2005 to 2013.

The now-defunct Kingfisher Airlines in ninth on the list, which also includes Lloyds Steel, telecom cables maker Hindustan Cables, Hindustan Photofilms and real estate developer Zoom among the top five defaulting borrowers.

Newslaundry said on Tuesday it managed to get the RBI’s confidential list of the top 150 defaulters submitted to the Supreme Court.