50% IL&FS assets on block, 22 group firms servicing loans: Injeti Srinivas

Corporate affairs secretary justifies NCLAT ruling on non-classification group accounts as NPA, saying it is a one-off order, keeping in mind national interest

Fifty per cent of the assets of the beleagured IL&FS group are on the block, corporate affairs secretary Injeti Srinivas said on Tuesday. Speaking on the sidelines of the CII-IBC conference, Srinivas said that out of the 100 IL&FS companies that need classification based on the risk, all would be with high risk or medium risk profiles. About 22 entities of debt-ridden group are servicing their payment obligations.

Srinivas justifies the recent ruling by the National Company Law Appellate Tribunal (NCLAT), saying that it is a one-off order, keeping in mind national interest. 

    

NCLAT on Monday had ruled that accounts of Infrastructure Leasing & Financial Services (IL&FS) and its subsidiaries could not be classified as non-performing assets (NPAs) without approval from the tribunal.

The Reserve Bank of India (RBI) had earlier instructed banks to declare some accounts of the group as NPAs. Now, with NCLAT's ruling, the central bank's directive will not been applicable. 

Outstanding loans of the IL&FS group are about Rs 60,000 crore, while its overall debt is over Rs 91,000 crore. Hearing a plea moved by lenders, the Bench observed that the step was being taken in the interests of the resolution plan being carried out by the new board of IL&FS.

The government of classified IL& S companies into three categories. Those with enough to pay secured creditors but not unsecured ones are amber. Those unable to pay any creditor are red. The NCLAT has allowed green firms to service debt obligations. One of the companies classified as amber is IL&FS Tamil Nadu Power Company. PFC Financial Services (PFS) filed an intervention application claiming that IL&FS Tamil Nadu Power Company should be categorised as green. 

On February 22, PFS filed an application with the NCLAT seeking temporary dispensation of the asset classification. The tribunal heard this matter on Monday, and asked all financial institutions and non-banking financial companies to not classify the amber firms as NPAs

The government has been planning to sell the assets individually. 

IL&FS has defaulted on interest and principal on inter-corporate deposits as well, with the first instance being in June 2018. 

IL&FS was taken to NCLT under the provisions of the Companies Act in October 2018. The original board was replaced with a government-appointed board.