Government's misuse of the Life Insurance Corporation of India

I have been reading about how Life Insurance Corporation (LIC) is dangerously close to its minimum reserves.

IRDAI approval to LIC to acquire a further stake in IDBI Bank was in clear violation of the Insurance Act, which does not allow any insurance company to acquire more than 15 per cent stake in another company. 

A pet format for politicians and senior government officials to steal from us :

1. Prevail upon bankers to give loans to corporates who don’t intend paying that money back to the bank. Witness the 900 crores given to Mallya by IDBI Bank. The money given away is your and my deposits with the bank.
2. When the bank cannot pay its depositors back when the depositors need their money, infuse capital into the banks from tax money taken from you and me. The Govt. put 10,000 crores into IDBI Bank a while ago.
3. When the government feels short of money – simply raid into another depository of our savings – the LIC. Force them to put money into banks the politicians and senior Government officials caused to fail. LIC put  23000 crores in buying Government’s stake in a seriously loss making bank and is being asked to shell out another 10,000 crores as IDBI isn’t on its feet still.

Just six months after the Govt. forced LIC to pay it 21000 crores to pick up its stake in failing IDBI bank, the bank has requested LIC for a further 10,000 crores to make up for the money it gifted away to scammer corporates. Yet the same bank lost 4000 crores in just one quarter ending Dec 2018.

BJP leader Yashwant Sinha's comment after the ONGC stake sales, "This is daylight robbery," might look more reasonable to some. 

LIC has the insurance money of nearly 20 % Indians.

LIC holds 25 % stake in Infrastructure Leasing and Financial Services (IL&FS). The heavily debt laden IL&FS has been on a loan defaulting spree

Over the years, LIC has become the rescuer of anything that goes wrong in the world of finance. The money that LIC has, is the premium paid by its policyholders. Hence, unlike taxes paid by the taxpayers, this money does not belong to the government. It belongs to the policyholders of LIC.

It is worth remembering that LIC is not an asset reconstruction company or a distressed assets management fund or a vulture fund, which buys troubled assets cheaply and then tries to revive and sell them. It doesn't have any expertise in managing and running financial institutions, which are in trouble.

LIC has investments in 20 public sector banks, along with owning IDBI Bank. Given the mess in public sector banks, LIC already has a huge risk built into its investment portfolio.