However, the RBI
had appealed in the NCLAT, seeking modification against the order, saying banks must reflect defaults of the IL&FS group
and its entities as NPAs
in their accounts.
Group entities of the beleaguered IL&FS began to default due to asset liability mismatch in the second quarter of 2018-19. Its payment obligations on maturing loans were far more than its cash flows. The defaults by the IL&FS entities caused liquidity squeeze in the markets, affecting the non-banking financial companies and the housing finance companies adversely. The group companies have a total debt of more than Rs 94,000 crore.
Of the Rs 94,000-crore debt, state-owned lenders with exposure of Rs 35,382 crore (secured and unsecured) are the worst-hit, followed by investors holding non-convertible debentures of the IL&FS having an exposure of Rs 25,767 crore.