New Delhi: After superseding the IL&FS board, the Centre has once again moved the NCLT seeking relaxation in certain rules for faster resolution of crisis-ridden infra lender. Meanwhile, two major stakeholders in the beleaguered company, SBI and LIC, discussed matters relating to IL&FS with finance minister Arun Jaitley.
State Bank of India (SBI) chairman Rajnish Kumar said the bank was not too much worried about its exposure to IL&FS. “SBI has 6 per cent exposure to IL&FS. There is not much reason for concern. The new IL&FS board chief Uday Kotak is taking appropriate actions,” he said.
LIC chief VK Sharma did not comment. Life Insurance Corporation (LIC) holds 25 per cent stake in IL&FS and is keen to up its stake. Sources said LIC raised the proposed rights issue of IL&FS with the finance minister.
Both LIC and SBI suggested restoring confidence in the group which has defaulted in the debt market, triggering panic selloff in equities and bonds. They are believed to have told the minister that they are in favour of giving some time to the newly installed management to ascertain the facts regarding IL&FS’ debt obligations.
In another important development, the ministry of corporate affairs (MCA) has approached the National Company Law Tribunal (NCLT) again seeking relaxation in some rules. The NCLT said the Companies Act does not permit an exemption from procedure. But the tribunal is yet to pass its final order in the case. The MCA’s request is to allow the appointment of Vineet Nayyar as MD of IL&FS.
Nayyar is 80-year-old, while the permissible age for appointment of an MD is 75 years. The MCA has also requested for superseding boards of all 348 of IL&FS’ subsidiaries. The ministry has also sought approval for an expedited resolution process as IL&FS needs to repay nearly Rs 4,000 crore of debt over the next 30 days.
The government is so engrossed with the IL&FS crisis that it did not react to rupee closing below the 74–mark. A source said the first priority is now maintaining liquidity, as NBFC crisis seems to be expanding.
“Our focus is internal liquidity issue. That’s why we welcome RBI not hiking rates as that would have aggravated the current liquidity crisis. We can always use our resources to appreciate the rupee. But the spiral effect of the credit market (crunch) jams up the entire system. We must avert credit squeeze,” the source said.