Risky recourse: on LIC’s proposed stake in IDBI Bank
The Insurance Regulatory and Development Authority of India has approved a proposal to allow the Life Insurance Corporation of India to increase(वृद्धि/विस्तार) its stake(शेयर/दांव) in the ailing(मांदा/अस्वस्थ) state-owned IDBI Bank to 51%. The plan envisages(सामना करना /परिकल्पना करना) the insurer injecting much- needed capital into the financially stressed(प्रभाव डालना
/ज़ोर देना) lender(ऋणदाता/.कर्ज देनेवाला) , which was placed under the Reserve Bank of India’s prompt(प्रोत्साहित करना/शीघ्र)corrective action framework in May 2017 as a consequence(परिणाम/महत्व) of its non-performing assets(संपत्ति) rising beyond a threshold. While there are no details on how exactly this capital infusion(संचार/प्रेरणा) will take place — reports suggesting that the LIC may acquire(प्राप्त करना/अधिकार करना) the additional 40% stake it would need to reach 51% shareholding from the Government of India — market speculation(चिंतन/अटकलें) and media reports have estimated figures north of ₹10,000 crore. While for the LIC the sum is a small fraction(अंश/भाग) of the ₹1.24 lakh crore it received in just first-year premiums in the year ended March 31, 2017, for IDBI Bank the funds would almost equal the ₹12,865 crore in capital infusion it got from the government in the last fiscal. Whether this will be adequate(पर्याप्त/उचित) to even staunch(पक्का/निष्ठावान the flow of red ink at the troubled(परेशान/तंग किया) bank, leave alone help it turn around, is another matter. The bank posted a net loss of ₹8,238 crore in the 12 months ended March 31, 2018, and is facing the prospect of more losses with gross non-performing assets rising to 28%.
The proposal raises(ऊपर उठाना/एकत्र करना) several troubling questions. The government clearly sees it as a relatively painless(दर्दरहित/पीड़ारहित) way to recapitalise the bleeding bank without adversely(विपरीत ढंग से/हानिकारी रूप में) impacting its fiscal position, but the risks in increasingly banking on state-controlled cash-rich corporations to help bail out other state-owned companies or lenders are too significant(सार्थक/महत्वपूर्ण) to be glossed over. Then, there are the regulators. The IRDA, whose mission is to “protect the interest of and secure fair treatment to policyholders”, is reported to have exempted the LIC from the well-reasoned 15% cap on the extent of equity(निष्पक्षता/औचित्य) holding an insurer can have in a single company. This puts at risk the interests of the premium-paying customers of the LIC. The Securities and Exchange Board of India has in the past waived(माफ कर दिया/टालना) the mandatory(आदेशात्मक/अनिवार्य) open offer requirement under its takeover regulations when it involved(लिप्त/संयुक्त किया) a state-run acquirer and another state enterprise(व्यवहार-कुशलता/उद्यम) as the target. As the capital markets watchdog, SEBI has an obligation(आभार/कर्तव्य) in all such cases to weigh the interests of the small investor. And the RBI, as the banking regulator, should not ignore the contagion(संक्रमित/छूत) risks that the level of“interconnectedness(अंतर्संयोजनात्मकता)” the proposed transaction would expose the entire(संपूर्ण/मुकम्मल) financial system to.
Important Vocabulary
1.Ailing(मांदा/अस्वस्थ)
Synonyms: diseased, feeble, ill, sickly, weak
Antonyms : able, fit, healthy, hearty, sound
2.Infusion(संचार/प्रेरणा)
Synonyms: admixture, mixture, strain
3.Adequate(पर्याप्त/उचित
Synonyms: acceptable, capable, competent, decent, fair
Antonyms: inadequate, inappropriate, incapable, incompetent, inept
4.Speculation(चिंतन/अटकलें
Synonyms: belief, conjecture, opinion, thought, cerebration
Antonyms: reality, truth, disdain, disregard, ignorance
5.Envisages(सामना करना /परिकल्पना करना)
Synonyms: anticipate, behold, conceive, conceptualize, contemplate
6.Troubled(परेशान/तंग किया)
Synonyms: agitated, anxious, bothered, concerned, confused
Antonyms: calm, certain, comforted, content, happy
7.Adversely(विपरीत ढंग से/हानिकारी रूप में)
Synonyms: negatively, skeptically, resentfully, unsympathetically, with prejudice
8.Significant(सार्थक/महत्वपूर्ण)
Synonyms: compelling, important, momentous, powerful, serious
Antonyms: insignificant, trivial, unimportant, meaningless, minor
9.Waived(माफ कर दिया/टालना)
Synonyms: abandon, allow, defer, forgo, grant
Antonyms:approve, carry out, continue, deny, do
10.Contagion(संक्रमित/छूत)
Synonyms: Contamination, illness, pollution, virus, bane
Antonyms:purification, advantage, cleanliness, good luck
11.Enterprise(व्यवहार-कुशलता/उद्यम)
Synonyms: activity, business, company, firm, operation
Antonyms: idleness, abstention, certainty, entertainment, fact
