"LIC's stake is more than 9 per cent for the banking system as a whole. So, from the point of interconnectedness and contagion, as a probability, it is something that affects financial stability. It's not that it's affecting today or it's going to affect tomorrow, but these are probabilities," he said when asked about why he is worried about LIC raising holding in banks.
When asked what the central bank is doing on this, he said, "There are inter-regulatory frameworks. And what we do in our financial stability report, we flag these issues."
According to Mundra, with 9.21 per cent stake in banks, including private lenders, LIC is the largest shareholder in the banking sector after the government.
It also holds 13.6 per cent in the third-largest private sector lender Axis Bank, in which the government also holds almost same stake, and 9.7 per cent in the largest private lender ICICI Bank apart from some stakes in banks like HDFC, Kotak Bank and Yes Bank among others.