IFIN recovers Rs 2,300 cr from third party borrowers, external investments

IL&FS Financial Services, the financial services arm of the beleaguered Infrastructure Leasing & Financial Services (IL&FS) group, has recovered approximately Rs 2,343 crore from its third-party borrowers and external divestments as of November 2021, an affidavit filed by the government on behalf of the group with the National Company Law Appellate Tribunal (NCLAT) said.

Of the total recovery, there are 10 accounts from which the exposure has been fully recovered to the tune of Rs 1,393.6 crore. Further, recovery from external divestment was Rs 400 crore and recovery from resolutions executed with third party borrowers was Rs 458.7 crore. IFIN has also recovered Rs 90 crore from other third-party borrowers.

IFIN had recovered Rs 1,380 crore till end-November 2019.

The gross non-performing assets (NPAs) ratio of the loan exposures of IFIN touched 99 per cent as of November 30, 2021. As of March 2019, IFIN had a loan book of Rs 12,945 crore, of which 96 per cent of the loans were non-performing. As of December 2018, IFIN had a gross NPAs ratio of 90 per cent as against 5.3 per cent in March 2018. The IL&FS group went bust in September 2018, causing a huge liquidity crisis in the system.

According to the affidavit, IFIN had placed 62 non-performing asset (NPA) accounts worth Rs 4,297 crore on sale, which was to be done through the 'Swiss Challenge' route. Under the Swiss Challenge method, the highest bid in the first round of bidding becomes the base price for bidders, including for the highest bidder, to place counter-bids in the second round of bidding. The asset goes to the highest bidder in the second round.

“Due to lack of appetite by the majority of potential bidders for such a diversified portfolio and the difficulties in gauging potential recovery across a portfolio of 62 NPA loan accounts spanning across multiple industries, the process yielded only one Swiss challenger bid. The challenger bid value was an increment of 45 per cent over the initial bid”, the affidavit said.

Further, post the extension of the right to match to the initial bidder, the initial bidder did not match the Swiss challenger’s bid. Thus, the Swiss challenger has emerged as the selected bidder with the highest bid, the affidavit said.

Currently, the approval from the committee of creditors is being sought for sale of the NPA accounts put on the block. The recovery from the sale of the accounts and one-time settlement agreements entered into by IFIN would be in addition to the amount recovered against the external loan portfolio of Rs 5,959 crore as of November 2021, resulting in the cumulative recovery of 44 per cent by value of the external loan book of IFIN.