INSUBCONTINENT EXCLUSIVE:
NEW DELHI: Insurance companies have been asked to declare their exposure to liquidity-strapped Infrastructure Leasing Financial Services
and its group firms by the sector regulator
ILFS has defaulted on repayments and has had its debt rating downgraded, which has in turn roiled the markets.
The Insurance Regulatory and
named, to ensure policy holders are protected
Rating companies have downgraded ILFS to default after it failed to meet recent commercial paper and debenture obligations.
This poses a
problem for insurers as they cannot invest in debt paper below a certain grade
India has more than 50 general and life insurance companies
The ILFS group has a total debt obligation of over Rs 90,000 crore, of which bank loans account for Rs 57,000 crore, mostly from staterun
lenders.
LIC held a 25.34% stake in the company at the end of March
The second-largest shareholder, Orix Corporation of Japan, owned 23.5%
Among other government-owned entities, State Bank of India and Central Bank of India held 6.42% and 7.67%, respectively.
NO DIRECTION YET TO
PULL OUT OF ILFSAnother senior government official said the regulator is concerned about the safety of insurance policy holders and wants an
early assessment to prevent any contagion risk
IRDAI did not reply to queries
Chairman Subhash Khuntia did not respond to text messages or calls
On Thursday, listed group unit ILFS Financial Services said it had defaulted on seven fresh payment obligations worth Rs 395.46 crore.
The
defaults related to five bank loans (including interest) totalling Rs 239.50 crore, term deposit obligations of Rs 103.53 crore and
short-term deposits worth Rs 52.43 crore, ILFS has told the stock exchanges.
GOVT MONITORING SITUATIONThe government said it is monitoring
the situation on ILFS and would take appropriate measures
It has lot of connections with the government departments
the department of economic affairs
