We think Life Insurance Corporation (LIC) is in the business of life insurance to give you security for your life, you can be a little bit wrong. LIC did give advances by way of term loans and non-convertible debentures (NCDs) to private sector entrepreneurs because of which gross NPA raised to 6.10% for the first six months (April-September) of financial year 2019-20 while in the past, it had been between 1.5%-2%.
The big defaulters names include Deccan Chronicle, Essar Shipping, Gammon, IL&FS, Bhushan Power, Videocon Industries, Alok Industries, Amtrak Auto, ABG Shipyard, Unitech, GVK Power and GTL etc. The LIC earns profits of over ₹2,600 crores annually. Now, the provisions in financial statement is over 90% because of this defaulting cases. The book value of outstanding loans under default is about ₹25,000 crores, followed by pension business with ₹5,000 crores and unit-linked insurance plans (ULIPs) with around ₹500 crores.