The Indian Army which was in denial over ex-servicemen or welfare fund having any exposure to the toxic IL&FS bonds, as reiterated by IANS, has finally accepted that India’s only independent news wire was right in its analysis.
Answering questions finally, the Army PRO said that Army Group Insurance Fund (AGIF) has very stringent investment norms. The investments are undertaken based on advice by the most prominent & respected financial icons in the country.
Earlier, Army PRO Lt Col Mohit Vaishnava had been obfuscating the issue and not responding.
Here’s the latest Army version alongside the facts pointed out by IANS:
•The returns generated by the AGIF over the years have been among the very best, within the stipulated Risk Reward Matrix. This is vouched by the financial experts in the country. (Never doubted by IANS)
•The AGIF has had ‘no NPAs’ since year 2000. The Infrastructure Leasing & Financial Services (IL&FS) was AAA rated (highest rating) company and was being supported by both Central and state governments when AGIF investments were made. It suddenly got downgraded in August 2018 from AAA to Default.
Of the Rs 91,000 crore debt of IL&FS, banks have exposure of over 63%, mutual funds over 3% and insurance companies, EPF & Pension Funds – over 5%. This was despite the professional economic wizards & market experts having been employed by the banks & AMCs who too could not foresee the problem.
The AGI exposure is minuscule (less than 0.5%) as compared to banks/AMCs/pension Funds. (All in public domain and in fact IANS says AGIF exposure was Rs 210 cr to the virus-infected IL&FS bonds).
• Notwithstanding, AGIF is in touch with the new management of the IL&FS and is hopeful of a positive outcome. (Corroboration of IANS story)
•It is also to highlight that not only the Generals, but all ranks are contributing towards the AGIF and the returns are accrued to them based on the premiums paid. The contribution figures have been misquoted with intent to sensationalise the issue. (Ex servicemen welfare website)
•Exposure of AGIF to IL&FS bond is well below half a per cent of its assets. This is exactly what IANS wrote citing Rs 210 cr AGIF exposure.
•AGIF is managed by professionals who have right ideas about organization, market. The institutions of Board of Governors (BoG) & Investment Advisory Committee (IAC) have the best of talents that India has.
•Needs to be viewed from the perspective that the banks have average NPAs in the range of 9.3% (SBI: 8.71% & HDFC: 1.38%), the LIC has NPA of approx 6.23% and the debt MFs have NPAs up to 2-3%
•AGIF is well capitalised with sound assets to meet any commitments towards the members.