Business

Centre Using Public Money To Save Debt-Laden IL&FS Group, Says Rahul Gandhi

JAVED SAIFI | 0
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| September 30 , 2018 , 19:31 IST

In a fresh attack on central government, Congress President Rahul Gandhi on Sunday alleged that Prime Minister Modi-led government had used public savings with Life Insurance Corporation and the State Bank of India (SBI) to bail-out the debt-ridden Infrastructure Leasing & Finance Services (IL&FS group).

In a tweet, Gandhi alleged that PM Modi is bailing out the IL&FS group which has a long-term debt liability of around Rs 91,000 crore via public savings in LIC and the State Bank of India (SBI).

The tweet in Hindi titled "Lights, Camera, Scam", alleges that in 2007 when Modi was the Gujarat Chief Minister, IL&FS was given the 'GIFT CITY' project worth Rs 70,000 crore. Till date, no work has been achieved under the plan.

Gandhi also said that in 2018, Modi was bailing out the same company via LIC an SBI.

Recently, the Congress has raised the issue and warned of "an impending 'Lehman Brothers-type' economic crisis facing the country". The IL&FS crisis has also dented equity investors confidence in the entire NBFC space.

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Besides, the party has called for a forensic audit of the group over the disbursement of Rs 42,000 crore in the last four years.

Similarly, Congress spokesman Manish Tiwari also tweeted, "This is why IL&FS financials need to be forensically audited as management, principal shareholders and NDA/BJP government are unwilling to address the 42,000 crore question Peruse the second Graphic minutely. Rs 42,000 crore was disbursed in past four years. Nobody knows where the money disappeared."

The call for an audit comes at a time when concerns have been raised regarding the financial stability of the group after some of its subsidiaries defaulted on commercial paper repayment obligations.

On Saturday, the cash-strapped company said it was planning to have a "successful" rights issue and would sell its assets to repay creditors.

The company in its Annual General Meeting sought shareholders' permission to carry out its plans to recapitalise itself.

IL&FS Financial Services, a group company, defaulted in payment obligations of bank loans (including interest), term and short-term deposits and failed to meet the commercial paper (CP) redemption obligations due on September 14.

On September 15, the company reported that it had received notices for delays and defaults in servicing some of the intercorporate deposits accepted by it.

Consequent to defaults, rating agency ICRA downgraded the ratings of it's short-term and long-term borrowing programmes.

IL&FS Ltd is a core investment company and serves as the holding company of the IL&FS Group, with most business operations domiciled in separate companies which form an ecosystem of expertise across infrastructure, finance and social and environmental services.

As on March 31, 2018, LIC and ORIX are among the largest shareholders in IL&FS with their stakeholding at 25.34 per cent and 23.54 per cent, respectively.

(With Inputs From IANS)