IL&FS lenders to continue making provisions for loans to the group

Only the current earning flows should be used to make provisions and future cash flows should not be loaded with the obligation to make provisions.

With limited prospects for recovery of loans to Infrastructure Leasing and Financial Services (IL&FS) and its subsidiaries in the near term, lenders will continue to make provisions for loans to the group.

In February, the National Company Law Appellate Tribunal (NCLAT) had ruled that lenders can’t treat loan exposures as non-performing assets (NPAs) without the appellate body’s permission. 

A two-member bench, headed by NCLAT chairman Justice (Retd) SJ Mukhopadhyay, had ruled on an application moved by some of its lenders.

The order came after the NCLAT on February 11 said subsidiaries of IL&FS would be divided into three categories — Green (companies that