The Infrastructure Leasing and Financial Services (IL&FS) group and its companies, under the burden of debt, had been apprised of the crisis by the Department of Economic Affairs (DEA) about a year and a half ago. Apart from this, the Ministry of Corporate Affairs (MCA) has said this by filing an affidavit in the National Company Law Appellate Tribunal (NCLAT). Also, the affidavit states that in a confidential letter dated September 30, 2018, the DEA had expressed apprehension about the possible collapse of IL&FS and its negative impact on the Indian economy. According to the confidential letter, the DEA said that if the IL&FS group collapses, the Indian economy will suffer. On the one hand, the payment problem will increase and the sale-process can start in the debt market.
Apart from this, there will be a lack of capital availability in the market and many non-banking financial companies (NBFCs) may get license cancelled. Simultaneously, MCA said that soon after the DEA expressed this concern, MCA had requested the National Company Law Tribunal (NCLT) to take over the management of IL&FS. At the same time, it was because the group and its companies had debts of more than Rs 91,000 crore. Apart from this, the concern of the DEA was that Asset Management Companies (AMC) had loaned about Rs 2,800 crore to the IL&FS Group companies. At the same time, corporate customers of these companies could insist on redeeming the bonds of IL&FS Group companies. But it was not possible for any mutual fund scheme to pay such bonds in a short time.
According to the affidavit, the total debt of ILFS group companies was Rs 94,215 crore at the end of January this year. Of this, Rs 10,173 crore belongs to government fund lenders such as Pension Funds, Provident Funds, Employee Welfare Funds, Gratuity Funds and Army Group Insurance Funds. At the same time, commercial banks accounted for 47 per cent of the debt with Rs 44,075 crore. In addition, the affidavit states that only about four per cent of the total debt is owned by IL&FS Group, IL&FS Financial Services (IFIN), IL&FS Transportation Networks Limited (ITNL) and IL&FS Energy Development Company Limited (IEDCL).
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