Reserve Bank of India (RBI) has strict norms in place regarding non-performing assets for banksThe government will soon approach RBI seeking a special dispensation for deferment of provisioning requirements for bank loans extended to some ILFS group firms amid ongoing efforts to monetise assets of crisis-hit group, official sources said on Tuesday.
Some companies of diversified ILFS group, which has debt burden of over Rs 91,000 crore, have failed to repay loans.
Following crisis at ILFS late last year that raised concerns over liquidity in system, corporate affairs ministry had superseded its board.The sources said efforts to monetise certain assets of ILFS are progressing and group is expected to come out of woods in next four to five months.Against this backdrop, sources said ministry would soon approach RBI seeking dispensation for deferment of provisioning of loans with respect to some ILFS group firms.The Reserve Bank of India (RBI) has strict norms in place regarding non-performing assets for banks and a relaxation is expected to help government in getting more time to resolve problems at ILFS.The sources said government has identified a few ILFS subsidiaries having ample funds in their escrow accounts but are unable to service their debt obligations.The government is likely to cite current situation, including availability of funds in escrow accounts of certain ILFS companies, for seeking special dispensation, they added.On Tuesday, ministry reviewed progress made in dealing with problems at group.Following series of defaults by some group companies, government superseded board and appointed seasoned banker and Kotak Mahindra Bank Managing Director Uday Kotak as chairman in October 2018.The ILFS group companies are estimated to have outstanding loans of about Rs 60,000 crore to banks and financial institutions, while total debt is over Rs 91,000 crore.State-owned LIC is single largest shareholder in ILFS group with 25.34 per cent while Japan''s Orix Corporation owns 23.50 per cent shareholding.Among others, Abu Dhabi Investment Authority has 12.5 per cent stake, ILFS Employees Welfare Trust (12 per cent), HDFC Ltd (9.02 per cent), Central Bank of India (7.67 per cent) and State Bank of India (6.42 per cent), at end of March 2018.In August 2018, debt crisis at ILFS group came to fore when one of its companies defaulted on repayment of Rs 1,000 crore debt to Sidbi (small industries development bank of India).