Uti Bank Takes Ifci To Tribunal

Institution failed to repay Rs 85 crore in set time

UTI Bank has filed a suit against financial institution IFCI Ltd in the debt recovery tribunal at Mumbai to recover Rs 85 crore in dues. It is the first bank in India to proceed against a financial institution.

Confirming the development, IFCI Chairman and Managing Director V P Singh, said: "We are discussing the issue. It will soon be sorted out with government help."

IFCI had taken a short-term loan of Rs 100 crore from UTI Bank, but cleared about Rs 15 crore in the stipulated period. It had sought time to clear the dues citing liquidity problems, institutional sources said. The Cabinet Committee on Disputes usually resolves issues involving government-controlled institutions. However, UTI Bank has decided to take legal recourse to recover its dues.

 

In the past 21 months, IFCI defaulted on a number of occasions in meeting its repayment obligations to institutional lenders and investors due to liquidity problems. But, this was the first instance of a matter being referred to court.

Debt recovery tribunals were set up through a law cleared by Parliament in 1993. They have the power to attach property. The decision of a tribunal can be challenged in appellate tribunals set up by the government.

IFCI executives said once the exercise to restructure liabilities was completed, the institution