The Centre on Friday said it had not directed banks and financial institutions to cut down on their exposure to the housing sector while emphasising on the need for stronger regulatory mechanism to avert recurrence of the housing finance scam.
Finance Minister asked lenders, who have exposure to an estimated over Rs.1,000-crore in dubious deals unearthed by the CBI, to ensure their money is safe, while state-run insurer LIC termed it is a case of bribe not a scam.
Earlier this week, the CBI arrested top officials of LIC and its affiliates as also other banks and financial institutions for granting corporate loans in lieu of grafts.
The Securities and Exchange Board of India is also looking into possibilities of insider trading in companies that are beneficiaries of the hosing finance racket.
Coming under the intense government scrutiny, the housing and banking shares have taken a big hit this week in bourses. Allaying fears of home loan seekers and realty players, Financial Services Secretary R. Gopalan told reporters that the government had not directed banks and financial institutions to cut down on their exposure to the sector.
“No, why we should say this,” Mr. Gopalan said when asked if the government had directed the PSU banks to reduce their exposure to the real estate sector.
On the other hand, major realty players put up a brave front to dispel the rumours that scam would bring down the prices in the sector saying any individual misdemeanour was unlikely to impact the demand and prices.
Finance Minister wanted banks to ensure that the invested money is safe. “You know I have already instructed banking and financial institutions to look into all these issues and they should ensure that institutions money is saved,” Mr. Mukherjee said. Corporate Affairs Minister Salman Khurshid said the government would look at strengthening the regulatory mechanism to avoid recurrence of this kind of racket. Meanwhile, LIC Housing Finance has appointed V. K. Sharma as CEO in place of Ramachandran Nair, who was arrested in connection with the racket. SEBI also said the regulator would continue to take steps to protect the interests of investors.
“Regulator's job is investor protection. So, we (will) continue to take steps to protect investors,” SEBI wholetime member Prashant Saran said.
