Infrastructure Leasing & Financial Services (IL&FS) has reportedly defaulted on a multi-billion-rupee short-term loan from Small Industries Development Bank of India (SIDBI), according to a report by moneylife.
The report also says that the bank has asked one of its senior officials in the risk management department to resign over the loan default.
IL&FS has defaulted in repaying a short-term loan of Rs 10 billion to SIDBI. At the same time, a subsidiary of IL&FS too has defaulted in repaying loan worth about Rs 5 billion to the development financial institution, the report said.
However, since SIDBI does not really have any security to invoke in its loan to IL&FS and the bankruptcy code as stated in the IBC does not apply to non-banking financial companies (NBFCs), the moneylife report further said.
IL&FS is facing liquidity problems and has asked its promoters, led by Life Insurance Corporation, to infuse Rs 45 billion by a rights issue by the end of September. Beside, IL&FS has sought additional lines of credit worth Rs 35 billion from its promoters for meeting immediate requirements.
IL&FS group has firmed up plans to shed its debt by 37.5 per cent, or by Rs 300 billion, to Rs 500 billion by divesting 25 projects over 12-18 months. The overall debt is expected to come down to Rs 500 billion after the planned divestments.