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Govt to ensure liquidity for IL&FS, group's affairs to be probed: FinMin

The Finance Ministry said the move to take over the IL&FS board was essential to restore confidence in the financial market

Press Trust of India 


The government Monday said it stands fully committed to ensuring that needed liquidity is arranged for the debt-trapped to prevent any more defaults in payment of loans by the non-banking financial company.

On a day when the Mumbai-bench of allowed the government to take over the board of IL&FS, the Finance Ministry in a statement said the move was essential to restore confidence in the financial market and hoped that financial institutions would provide the NBFC liquidity.

"There is an emergent need to immediately stop further financial defaults and also take measures to resolve defaulted dues to the claimants.

"This would require a combination of measures of asset sales, restructuring of some liabilities and fresh infusion of funds by the investors and lenders. The confidence of the financial market in the credibility of the management and the company needs to be restored," the ministry said.

Observing that the company continued to pay dividends and huge managerial pay-outs regardless of looming liquidity crisis, the statement said, "it shows that the management had lost total credibility." If further said that there have also been serious complaints on some of the for which an investigation has been ordered into the affairs of and its subsidiaries.

The Monday approved reconstitution of IL&FS board appointing six members including Uday Kotak as non-executive chairman.

First Published: Mon, October 01 2018. 17:41 IST