LIC - The Default Bad Bank? - Chart Of The Day 17 August 2018 - Equitymaster
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LIC - The Default Bad Bank?
Aug 17, 2018


Ask an average Indian investor about the next best thing after safe bank deposits. I can bet they would tell you about LIC policies. For generations Indians have treasured LIC policies in their safe deposit lockers like their gold and fixed deposit receipts.

Life Insurance Corp. of India (LIC) meanwhile, has been acting like the government's ATM for years. It has bailed out public issues of scores of PSUs. And helped the government milk by buying a majority stake in several state-owned lenders. The latest attempt to bail out the troubled IDBI Bank is a classic case of the state insurer buying toxic assets.

In fact, given the high stakes that LIC owns in the most troubled banks, the government needn't even consider the proposal of setting up a 'Bad Bank'. It could just turn LIC into one. At least then the investors owning investments in LIC policies, would know the real risk they carry.

Data Source: Bank presentations, Mint

This Chart Of The Day was published in The 5 Minute WrapUp - Are Your Bank Deposits Riskier than Your Bank Stocks?

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