LIC cuts stake in public sector banks

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The largest investor in State owned Banks, Life Insurance Corporation (LIC),   has trimmed its exposure on PSBs.  During last one year, the average holding in 20 PSBs has come down to 11.9% from 12.7%.

  1. In fact, in the last one year, the average holding in 20 PSBs has come down to 9% from 12.7%.
  2. During the period of two years, LIC has reduced its stake in most of public sector banks (PSBs) with Bank of Baroda seeing the biggest reduction of nearly five percentage points (ppts) since June 2015.
  3. This was followed by United Bank of India where the insurer reduced its exposure by another 4.82 ppts.
  4. More alarming was that:
    • The bad loan ratio of Bank of Baroda increased to 11.4% in June 2017 from 4.13% in June 2015.
    • United Bank of India saw its NPA ratio increasing from 9.6% to 17.2% during the period.
    • The holding in Corporation Bank – the highest ownership among the PSBs -declined by 3.63 ppt to 18.9%.
    • LIC has also reduced its ownership in Bank of India by 2 ppts.
    • LIC reduced its stake to 1.9 ppts in Indian Overseas Bank.
    • The holding in SBI comes off by one percentage points to 10.4%.
  5. In the last two years, the gross non-performing assets of 20 public sector banks rose over two fold to `7.3 lakh crore at the end of June 2017 as per data compiled from Capitaline.
  6. The NPA ratio of bad loans as a percentage of total advances increased to 13% in June 2017 which was 5.5% in June 2015.

 

Author: Admin Bankedge

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