New Delhi, Nov. 26: The government on Friday said it has not directed banks and financial institutions (FIs) to cut down on their exposure to the housing sector, while emphasising on the need for a stronger regulatory mechanism to avert recurrence of the housing finance scam.
The finance minister, Mr Pranab Mukherjee, has asked lenders, which have an exposure to an estimated over `1,000-crore in dubious deals unearthed by CBI, to ensure their money is safe, while state-run insurer LIC termed it is a case of bribe not a scam.
“You know I have already instructed banking and financial institutions to look into all these issues and they should ensure that institutions money is saved,” Mr Mukherjee said.
Earlier this week, CBI arrested top officials of LIC and its affiliates as also other banks and financial institutions for granting loans in lieu of favours.
Coming under the intense government scrutiny, the housing and banking shares have taken a big hit this week at bourses, with BSE index Sensex plunging below 19,000 points in intra-day trading on Friday.
Allaying fears of home loan seekers and realty players, the financial services secretary, Mr R. Gopalan, said the government has not directed banks and financial institutions to cut down on their exposure to the sector.
“No, why should we say this,” he said, when asked if the government has directed the PSU banks to reduce their exposure to the real estate sector.
Realtors have dispelled rumours that the scam would bring down prices saying an individual misdemeanour was unlikely to impact demand and prices.
The corporate affairs minister, Mr Salman Khurshid, said that the government would look at strengthening regulatory mechanism to avoid recurrence of this kind of racket.
“The government has several regulatory mechanisms in place. But when such things happen, despite these mechanisms, there is a requirement to look at further strengthening of this mechanisms," he said.
Refusing to call it a scam, LIC chairman, Mr T.S. Vijayan, said it involves individual officers and ass-erted that state-run insurer is very strong.