IL&FS Capable Of Handling Its Issues, Says Economic Affairs Secretary Garg
Infrastructure Leasing & Financial Services has defaulted on a series of interest payments and needs to resolve issues on its own, Economic Affairs Secretary Subhash Chandra Garg said.
"IL&FS is independent of government with independent board and shareholders. So, IL&FS needs to resolve its issues on its own and I think it's capable of doing it," Garg told PTI.
Although the government has no holding in the company, some of the state-owned financial firms, including LIC and the State Bank of India, are shareholders of the non-banking financial company.
It has assets, it has liabilities to take care. There might be some temporary mismatch, so it’s IL&FS which will deal with the problem. The government is not involved directly.Subhash Chandra Garg, Economic Affairs Secretary.
Earlier this month, the IL&FS Group defaulted on inter-corporate deposits and commercial papers. On Sept. 4, it came to light that IL&FS had defaulted on a short-term loan worth Rs 1,000 crore from the SIDBI, while a subsidiary had also defaulted on Rs 500 crore dues to the development financial institution, which reportedly forced the Small Industries Development Bank of India to ask its chief general manager in charge of the risk management department to resign.
State-owned LIC is the largest shareholder with a fourth of the firm's equity, while Orix Corporation of Japan owns a 23.5 percent stake.
In a letter to its employees, IL&FS had claimed that if funds worth Rs 16,000 crore stuck with concession authorities were released on time, it would not have landed in this mess.
"Our monies were used to fund the cost and time overruns caused by concession authority delays in handing over right of way. It's our case that if concession authorities released our monies, around Rs 16,000 crore of IL&FS group liquidity and stuck in claims and termination payments, we would not be in the situation that we are in," IL&FS had said in its letter.
IL&FS, which is credited for building the longest tunnel in the country, is sitting on a debt pile of around Rs 91,000 crore and had been downgraded to junk status by rating agencies following the default. Of this, Rs 57,000 crore are bank loans alone, most of which are from state-run lenders.
While IL&FS Transport Network, the holding firm of the group's road assets, has nearly Rs 35,000 crore consolidated debt, IL&FS Financial Services has Rs 17,000 crore of debt, which sits as standard asset for most banks, according to a Nomura India report.