UTI MF opposes 42% haircut for IL&FS entity, challenges its 'amber' status

Fund house says proposal completely ignores sponsor undertaking and differentiation between secured and unsecured lenders

UTI Mutual Fund (MF) has taken objection to IL&FS group officials' proposal that lenders should take 42 per cent haircut on their exposure to the group's special purpose vehicle -- Jorabat Shillong Expressway (JSEL).

"UTI MF has strongly objected to the proposal shared as it completely ignored the sponsor undertaking and differentiation between secured and unsecured lenders," the fund house said in an investor note.

The note pointed out that the haircut was proposed when the fund house met IL&FS officials to discuss how JSEL's classification can be changed from 'amber' entity.

'Amber' entities are those entities that are not