Expressing fear LIC is going to sink like UTI as in the case of UTI, cause of disaster was Uint-64 scheme, in the case of LIC, Unit Link Investment Plans (ULIP) are going to spell doom and for this disaster no one but LIC chairman and finance minister P Chidambarm are responsible, alleged former MP and member of BJP's national executive Kirit Somaiya.
He and several other orgnisations and individuals are made representation to Insurance Regulatory and Development Authority (IRDA) about unscientific manner in which, LIC was investing in the stock markets.
After these representations even IRDA, cautioned LIC but LIC unrelentlessly continued to invest heavily in market and promote ULIP schemes over traditional insurance products.
In fact in letter written to him in January this year, by joint secretary, Insurance and Banking Tarun Bajaj, finance ministry overwhelmingly supported promotion of ULIP related schemes over traditional insurance products, said Somaiya.
The Net Asset Value (NAV) of all the ULIP related schemes of LIC like Market Plus, Money Plus and Profit Plus is less than half, who is responsible for destruction of wealth of common investor, who don't understand markets, he asked.
The real estate sector is another case study in destruction of investor's wealth.
Over last two to three years, unregulated flow of the fund from banks, foreign financial institutions, private equity and hedge funds, non banking financial institutions (NBFC) was allowed toward reality sector, which increased both prices of properties and market valuation of real estate companies by many folds.
After market valuation of these companies allowed to go through roof, they came out with IPOs with heavy premiums and today we know what is valuation all these almighty reality firms like DLF, Unitech, Parsvanath. Etc., he added.
Demanding method for premium charged at the time of IPO or public issue Somaiya said, responsibility must be fixed with lead mangers, merchant managers or whosever is responsible for recommending such high premiums for real estate companies stocks, he said.