LIC's wealth in PSBs eroded by Rs 17,000 crore in a year, says report

Life Insurance Corporation has lost more than Rs 17,000 crore of its investments in public sector banks over the last one year owing to sharp fall in the price of PSU bank stocks and dilution of its stake due to capital infusion by the Centre, reported BusinessLine on Thursday.

The report said that excluding IDBI Bank, LIC has lost more than Rs 4,800 crore in other public sector banks.

According to the report, the government's recent decision to combine 10 PSBs into four would only lead to the company's value of holdings in PSU Banks erode further.

"The government infusing capital year after year into public sector banks, has eroded value for investors," the report said, adding this is due to most PSBs trading at a steep discount to their book value. Fund infusion at such low valuations immediately leads to dilution in equity base, said the report.

The government last week announced the merger of 10 PSU banks into four — PNB, OBC, United Bank; Syndicate, Canara Bank; Union Bank, Andhra Bank and Corporation Bank; and Indian and Allahabad Bank.