MUMBAI: India's LIC Housing Finance said on Monday loans worth 3.

89 billion rupees ($85 million)

issued by it were under probe by the federal investigative bureau in a financial bribery scandal.

The company said the outstanding loans under scrutiny by the Central Bureau of Investigation were
performing and the value of securities against the loans were at over 10 billion rupees.

Eight executives from public and private-sector financial institutions have been arrested in the scandal,
including the chief executive of LIC Housing Finance, who has since been removed from his post.

Besides LIC Housing Finance Chief Executive R.R. Nair, those arrested include senior officials at state-run
Central Bank of India , Punjab National Bank and Bank of India for allegedly accepting bribes for
sanctioning loans.

Recent Housing finance scandal likely to be a

setback to realty companies
NEW DELHI: The ongoing investigation of LIC Housing Finance and some public sector banks
is set to impact realty companies, which are already facing a crisis of confidence among
institutional investors. The development will adversely impact their ability to raise resources
either through debt or equity. Given their market performance this fiscal, realty stocks are
finding few buyers.
Moreover, as per industry estimates, a massive debt-burden of Rs.25000 crores to public &
private sector banks, is jeopardizing the stability of real estate companies. Most of the proposed
equity issues are aimed to repay debt. There are at least six firms that have got the market
regulator’s approval to launch their initial public offers (IPO) to raise Rs 9,841.16 crores. Many
realty firms such as Emaar MGF , Lodha Developers and Ambience are lying in wait to hit the
market. Moreover, Vatika Group, which had planned to raise upto Rs 1,000 crores from an IPO
by selling around 20% earlier this year, has now postponed its plan to December next year. The
other three companies, namely Oberoi Realty , Ashoka Buildcon and Prestige Estates that
mobilized Rs 2,500 crores, are trading marginally below their offer price.
The Housing finance scandal negatively affected the stock markets also, as soon after the scam
became public, the Sensex was down 0.73%, while the realty index dropped by 5.4%. Banks are
estimated to have outstanding loans of Rs 75,000 crores to the real estate sector, of which Rs
25,000 crores will have to be repaid by March 2011.
Stung with the ongoing investigation, banks are set to be more cautious in taking fresh exposure
in real estate firms in order to avoid any such future scandal, tarnishing their credibility, as the
present on
Housing Finance scandal will not malign the
real estate sector : Kumari Selja
However cautions financial institutions not to lend liberally
New Delhi: The Minister of Housing and Urban Poverty Alleviation, Ms Kumari Selja recently
announced that last week’s bank scam would not impact the growth of the housing sector in
India.
Speaking to newspersons on the sidelines of Royal Institution of Chartered Surveyors conference
on affordable housing, Ms Selja, however forewarned financial institutions to be cautious and
follow due procedures while lending.
She has assured that the RBI and other regulators are investigating the issue & devising new
strategies to ensure that such financial scams are not repeated in future. She also stressed on the
fact that since financial institutions are bound to lend, they must continue to do so, but with
adequate precautions & verifying all aspects of the loan to be given out. Moreover, she
emphasized that people holding pivotal portfolios have to bear responsibility for all financial
transactions.
Speaking on the ‘bribe-for-bank-loan’ scandal she disposed off all speculation regarding whether
banks would curtail loans to the realty sector. However, the Minister added that financial
institutions have to ensure that proper regulations are in place so the real beneficiaries do not
suffer.
The Minister further stated that the scam would not impact the growth of the housing sector.
Being confident of the potential of this sector, she claimed that the country is making impressive
strides. The Minister, who released the RICS report on ‘Making affordable housing work in
India’, said ushering financial inclusion for the poor remained a challenge. She mentioned that it
is the low-income groups who face the problem of access to housing finance. Financial
institutions are not able to adequately focus on them. Even people with decent incomes cannot
offer adequate security and so financial institutions see it as a risk
Meanwhile, the RICS report has sought Government intervention in a number of areas to tackle
the housing shortage, estimated at 26 million homes by 2012. The report outlined the need for
national and State level targets for housing and strict monitoring of outputs.
It has suggested that the traditional land auctioning process be substituted by ‘reverse tendering’.
Under this model, the Government would provide land with all approvals and pre-construction
formalities in place to the developer who bids for the minimum amount of land required as
compensation for development of pre-committed EWS, LIG and MIG units, the report states.
It also recommended that the housing microfinance provided by NGOs and specialist finance
agencies should be encouraged by the State, in part through provision of capital.

India’s MidCap Stock Scam gets Murkier as High Flying Agri Stocks get
Implicated
8 Dec, 2010 || by Abhishek Shah

Agriculture, Materials
Now the Investigative Bureau (IB) has said that another stock market operator Rathod was
colluding with promoters of agricultural companies like Ruchi Soya,Karuturi Global and KS Oils
to rig stock prices.This was being done through various front companies and maverick investor C
Shivasankaran was behind these moves.Note these companies have become the darling of
brokerages and media being touted as the next big thing with vertical integration and acquisitions
of agricultural land in Africa.The media hype that these companies got also makes one suspect
that some of these firms were also involved in this scam.The Modus Operandi was again the
same as followed by Dangi and Ashika group firms earlier.It remains to be seen if prosecution
results in any jail time for any of these offenders.Generally nothing happens in corruption
scandals in India as a SC Judge recently note that corruption had become a way of life.