The Indian Banks' Association (IBA) has asked Reserve Bank of India (RBI) and the government for a six-month exemption on asset classification of loan exposure to the debt-laden IL&FS group, Business Line reported.
Lenders expect their provisioning to balloon as about Rs 50,000 crore of the total Rs 90,000-crore exposure may turn into non-performing assets (NPAs) by the end of 2018.
The move comes ahead of the National Company Law Appellate Tribunal (NCLAT) hearing on December 17 regarding a proposal to extend the 90-day moratorium on loans taken by Infrastructure Leasing and Financial Services (IL&FS) and its subsidiaries.
In October, NCLAT stayed all proceedings by banks or companies against the debt-laden entity and it 348 subsidiaries in any court of law or tribunal, barring the High Court and Supreme Court.
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The lenders, including financial institutions, have been opposing the moratorium. If the moratorium on IL&FS loans is extended, some 12 big lenders will seek relief from the RBI and the Centre, sources told the paper.
"The IBA will write to the RBI and the Centre seeking a dispensation. If the NCLAT at the next hearing gives another 90-day moratorium, which is expected, then it will have repercussions for the lenders," a banker told the paper.
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On December 12, the IBA is said to have discussed at length the issues and challenges arising out of the 90-day moratorium on loans taken by IL&FS. According to the report, the meeting was attended by lenders including State Bank of India, Bank of Baroda, Canara Bank, Punjab National Bank, IDBI Bank, Axis Bank, and Yes Bank.
The new board of IL&FS hopes to complete the resolution process within six to nine months. "The government has set an informal time period of six months for reviving the company. However, the board has decided to do it by early January,” a source told Moneycontrol.
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