The Reserve Bank of India (RBI) on Wednesday withdrew a circular asking banks and financial institutions to declare details of their exposure and provisions related to the troubled Infrastructure Leasing & Financial Services (IL&FS).
The April 24-circular has said banks and financial institutions must mention the total amount of exposure that are non-performing assets (NPAs) to the IL&FS.
The RBI withdrew the circular after the National Company Law Appellate Tribunal (NCLAT) allowed banks to declare defaulting loans of IL&FS and its group companies as bad loans.
“In view of the National Company Law Appellate Tribunal’s (NCLAT) order dated May 2, 2019 in respect of Company Appeal (AT) No. 346 of 2018 and I.A. No. 1139 of 2019, the instructions contained in the above mentioned circular stand withdrawn," said the RBI in a notification on Wednesday.
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.