The Government also warned that various mutual funds will be collapsed if IL&FS will collapses.
Modi government has reportedly moved the National Company Law Tribunal (NCLT) in Mumbai, seeking to supersede its board with a new 10-member board ed by veteran banker Uday Kotak. Acording to a moneycontrol report, the government counsel told NCLT that directors of IL&FS had "failed to discharge their duties", adding that the company has been showing a "rosy" picture of its balance sheet. The counsel also expressed concerns over the cascading impact of the IL&FS crisis on the overall economy.
The Government also warned that various mutual funds will be collapsed if IL&FS will collapses.
The IL&FS debt problem seems to be rising out of the infrastructure financing side and has nothing to do with the financials of other non-banking financial companies, a top banker said.
“There is no evidence or data to suggest that there is deterioration in the portfolio of NBFCs that are into housing loans or the retail sector. Even those focusing on lending to micro and small medium enterprises have no liquidity issues,” P S Jayakumar, chief executive officer and managing director of Bank of Baroda told DNA.
BoB, which is in the midst of amalgamation with two smaller banks – Mumbai-based Dena Bank and Bengaluru-based Vijaya Bank – is seeing a revival of credit growth and strong recovery cycle. “Credit growth is getting stronger for banks and the operating environment is improving. IL&FS is a one-off case which is being tackled by the government and its shareholders, but for the broader market there are no issues,” Jayakumar said.
But the cost of finance is going to rise and loans are going to get dearer as the demand for credit goes up with the recovery in the economic growths, he said. “In general, there is an upward bias in interest rates. Customers have to brace for a higher interest rate regime. Home loans are variable priced in India. So they have to accept the volatility in interest rates.”
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 "Government to take over IL&FS?")
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