It said banks and financial institutions must mention the total amount of exposure that are non-performing assets (NPAs) to the IL&FS.
The
Reserve
Bank of India (RBI) has asked banks and financial institutions to
declare details of their exposure and provisions related to the
troubled Infrastructure Leasing & Financial Services (IL&FS).
It said banks and financial institutions must mention the total
amount of exposure that are non-performing assets (NPAs) to the
IL&FS.
In
the matter between the IL&FS and the Ministry of Corporate
Affairs, the National Company Law Appellate Tribunal (NCLAT) had
earlier stated that no financial institution can declare the accounts
of the IL&FS or its group entities as NPAs without prior
permission of the tribunal.
However,
the RBI had appealed in the NCLAT, seeking modification against the
order, saying banks must reflect defaults of the IL&FS
group and its entities as NPAs in their accounts.
Group
entities of the beleaguered IL&FS began to default due to asset
liability mismatch in the second quarter of 2018-19.
Its
payment obligations on maturing loans were far more than its cash
flows. The defaults by the IL&FS entities caused liquidity
squeeze in the markets, affecting the non-banking financial companies
and the housing finance companies adversely. The group companies have
a total debt of more than Rs 94,000 crore.
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