LIC's Substantial Investments in Adani Group Under Scrutiny
Overview of LIC's Investments
The Life Insurance Corporation of India (LIC) has reportedly invested a staggering Rs 48,284.62 crore in companies associated with industrialist Gautam Adani, as disclosed by the Union government in Parliament.
This announcement follows a report from a major international newspaper, which indicated that LIC had allocated nearly $3.9 billion (approximately Rs 33,000 crore) to the Adani Group, allegedly under directives from the Union government.
The report suggested that these investments were made during a period when Adani's enterprises were grappling with significant financial and legal hurdles.
Details of the Investments
In a written response to queries in the Lok Sabha, Union Finance Minister Nirmala Sitharaman revealed that LIC had invested Rs 5,000 crore in secured non-convertible debentures from Adani Ports and Special Economic Zone in May.
This brought LIC's total investment in the Adani Group to Rs 38,658.85 crore in equity and Rs 9,625.77 crore in debt, according to the minister's statement.
Non-convertible debentures allow companies to raise funds without offering investors the option to convert them into equity, providing returns through regular interest payments and a fixed principal repayment upon maturity.
Government's Stance on Investment Directives
Sitharaman's remarks were in response to inquiries from Congress MP Mohammad Jawed and Trinamool Congress MP Mahua Moitra, who questioned whether the government had instructed LIC or other public sector entities to invest in Adani Group companies and if it had assessed the potential impacts of such decisions on policyholders and market integrity.
In her reply, Sitharaman clarified that the Ministry of Finance does not provide directives to LIC regarding its investment choices.
She emphasized that LIC makes its investment decisions independently, adhering to rigorous due diligence, risk assessments, and compliance with fiduciary responsibilities, as mandated by the Insurance Act and regulations from the Insurance Regulatory and Development Authority of India, Reserve Bank of India, and Securities and Exchange Board of India.
Controversies Surrounding the Investments
The newspaper's report claimed to have acquired internal documents indicating that the Union Ministry of Finance expedited a proposal in May to channel nearly $3.9 billion from LIC to the Adani Group, despite being aware of the associated risks.
These investments were reportedly crucial for the conglomerate to refinance its dollar-denominated debt obligations.
In 2024, a U.S. court indicted Gautam Adani for his alleged involvement in a $265 million bribery and fraud scheme linked to solar projects in India, which subsequently made global banks hesitant to lend to the conglomerate.
The report suggested that officials from the Department of Financial Services, under the Union Finance Ministry, collaborated with LIC and NITI Aayog to formulate the investment strategy that received approval in May.
Adani Group's Response
The Adani Group has firmly denied any involvement in purported government initiatives to direct LIC funds towards its enterprises.
In response to inquiries from the newspaper, the conglomerate stated, "LIC invests across various corporate groups, and implying preferential treatment for Adani is misleading. Furthermore, LIC has benefited from its investments in our portfolio."
LIC has asserted that its investment decisions are made independently, following board-approved policies and thorough due diligence, with no governmental influence in the process.