The Congress on Saturday accused the Centre of putting pressure on the Life Insurance Corporation (LIC) and the State Bank of India (SBI) to bail out the cash-strapped infrastructure development company, Infrastructure Leasing & Financial Services (IL&FS).
The party alleged that the proposed bailout by public financial institutions was tantamount to “pilfering common people’s money”.
With a 25.34% stake, the LIC is the single largest equity holder in the debt-ridden IL&FS, while the SBI holds 6.42%. The company is facing a meltdown with a consolidated debt of over ₹91,000 crore and has been defaulting on debt repayment obligations since August last week.
Cause for bankruptcy
“Being a 30-year old infrastructure lending giant, IL&FS has gone completely bankrupt today. How did the debt of this company jump by 44% and its profitability decline by 900% only in the past three years,” Mumbai Congress president Sanjay Nirupam asked at a press conference.
He alleged that poor corporate governance at IL&FS under the Modi government has resulted in bankruptcy.
At another press conference in Delhi, the Congress posed a series of questions on the financial firm’s crisis. “Proposed bailout of the IL&FS by the LIC and the SBI is just another classic example of how they are being forced by PM [Narendra] Modi for pilfering common man’s as well as public money, by investing in a company, whose top management has cheated millions of stakeholders by their fraudulent practices,” party spokesperson Gourav Vallabh said.
“Why is the Modi govt. jeopardising the savings of 38 crore LIC holders and crores of SBI depositors by burdening them with a ₹7,500 crore ‘Band-Aid’ package for IL&FS,” he asked.
