The National Company Law Appellate Tribunal on Thursday allowed banks to declare defaulting Infrastructure Leasing & Financial Services accounts as non-performing assets. However, the bench headed by NCLAT Chairperson Justice SJ Mukhopadhaya also clarified that the banks cannot initiate a recovery process for the debts due, PTI reported.
IL&FS, an infrastructure development and finance company, and its subsidiaries have a debt of Rs 91,000 crore, and are going through a resolution process. They defaulted on multiple loan repayments last year.
NCLAT said on Thursday that the firm’s lenders must not withdraw support until this process is completed. IL&FS group companies have now being classified according to their ability to pay off debts. Those which can meet all payment obligations have been categorised as “green”. Companies that can pay off only operational debts and senior secured debts are classified as “amber”, and those that cannot repay any loans have been classed as “red”.
The Serious Fraud Investigation Office had in April arrested former Managing Director and Vice Chairperson of IL&FS, Hari Sankaran. Sankaran, arrested in connection with investigation into defaults at IL&FS, was produced in a special court in Mumbai and sent to judicial custody. The Serious Fraud Investigation Office said that Sankaran granted loans to IL&FS subsidiaries which were not creditworthy, or were declared as non-performing assets. His transactions resulted in losses for the company and its creditors, the office added.