Government repays IL&FS loans to fulfil commitment: Report

The central government has repaid the sum of Rs. 1109 crore and Rs. 29 crore to the Asian Development Bank and German state-owned lender KFW, respectively, to fulfil guarantees offered to Infrastructure Leasing & Financial Services (IL&FS). The government provided loan guarantees; as a result, it has taken the place of the lenders and entered the list of IL&FS creditors. A difficult scenario in the split of assets could result from the government now being a creditor. Government dues and creditor dues are handled separately under the bankruptcy waterfall mechanism, which establishes the order of priority for various claims. The government-guaranteed loans were used to fund initiatives carried out by IL&FS companies. According to IL&FS’ most recent status report for the quarter that concluded in September 2022, the company secured a loan from ADB in August 2002 for $50.4 million. The Department of Economic Affairs of the Government of India ensured the loan. In November 2005, a further loan from KfW Frankfurt for 54 million euros was obtained. The government also provided security for this loan. The expected debt resolved up to 30 September 2022 is Rs 56,943 crore, based on the status report from IL&FS. This is greater than the resolution of Rs. 55,000 crore that was fulfilled in March 2022. At that time, former IL&FS chairman Uday Kotak had estimated that 62 percent of the debt’s total of Rs 99,000 crore would be recovered. The government is now a creditor, thus even though some of ADB and KfW’s claims have been settled, overall liability still remains. As of the cutoff date of October 2018, the claims management consultant has acknowledged that the government’s claims under its assurances are “contingent claims.” KfW’s claim is regarded as an unsecured financial obligation, whereas ADB’s claim has been regarded as a secured financial debt. In order to meet its commitments as guarantors, on 30 June 2022, the government made payments totalling Rs 1,109 crore to ADB and Rs 29 crore to KfW. After this settlement, the department of economic affairs frequently notified IL&FS that it was due money. The moratorium on any payments, according to IL&FS, restricts IL&FS from making any payments to the government. Read all the Latest News , Trending News , Cricket News , Bollywood News , India News and Entertainment News here. Follow us on Facebook , Twitter and Instagram .

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