The housing finance scam will not pose any threat to the country's financial sector, Union Finance Minister Pranab Mukherjee said on Saturday.
Speaking after inaugurating the 109th division office of the Life Insurance Corporation of India here, he assured depositors that their money would be safe.
The CBI recently arrested CEO of LIC Housing Finance Ramachandran Nair and LIC Secretary (Investment) Naresh K. Chopra, besides some bankers, for their involvement in the racket. They had allegedly sanctioned large-scale loans to corporate houses without following the guidelines.
“Only individual officers are involved in the housing finance racket. The outstanding to the controversial real estate companies from LIC Housing Finance was only 11.8 per cent of the total disbursal of funds. And the LIC is [too] a strong company to be affected by such a scam,” Mr. Mukherjee said. The CBI had booked the corrupt officials, and the law would take its own course.
Mr. Mukherjee asked the financial institutions to take their services to millions of people still left out. “Inclusive growth is the core of the country's development strategy. High economic growth without any benefit to the poor will not [help to] achieve the national goal of inclusive growth.”
About 70 per cent of the rural poor were still unable to access banking services, he said. “Financial institutions should adopt modern business strategies to accommodate them. Though social security schemes such as the Aam Admi Bhima Yojana and the Janasree Bhima Yojana cover 1.45 crore families, the penetration of insurance schemes among the weaker sections is still not deep enough.”
Mr. Mukherjee said the LIC was one of the success stories of the country's public sector. “Encouraging performance of the LIC has proved that the public sector institutions can perform well even under tight competition from national and international firms.”
T. S. Vijayan Chairman of the LIC, India, said the company would place more emphasis on social security schemes.
Mr. Mukherjee distributed scholarships to students under the Janasree Bhima Yojana.