IL&FS not a big concern, can be resolved, says SBI Chairman; why SBI’s exposure is protected

By: | Published: September 24, 2018 12:08 PM

Even as rising liquidity worries at ailing IL&FS are creating worries for banks, debt, and stock markets, SBI Chairman says there is no cause for concern.

IL&FS: Amid rumours of debt crisis in housing finance companies, stock markets on Friday witnessed a huge crash with BSE Sensex losing nearly 1,100 points only to recover later in the day.

Even as rising liquidity worries at ailing IL&FS are creating worries for banks, debt and stock markets, SBI Chairman says there is no cause for concern. The problem is not that big in magnitude as being projected and can be resolved, SBI Chairman Rajnish Kumar told The Indian Express in an interview. “No. It’s not like that… it’s (projected) out of proportion. IL&FS has underlying assets. Whatever exposure we have, it’s at the SPV (special purpose vehicle) level which is ring-fenced. It’s a problem which can be solved. It’s not that the magnitude of the problem is such that it can’t be resolved. I’m optimistic about it,” he said.

Amid rumours of debt crisis in housing finance companies, stock markets on Friday witnessed a huge crash with BSE Sensex losing nearly 1,100 points only to recover later in the day. “There is no concern on liquidity of NBFCs in view of their liquid cash position and availability of committed lines,” he also said.

On being asked about SBI’s exposure in IL&FS, Rajnish Kumar said, “Our exposure is around Rs 3,800 crore but that’s spread across 10-12 special purpose vehicles. We have picked up small shares in them. They are all performing assets. Total liabilities of the group going around are close to Rs 90,000 crore. This includes everything… loans, non-convertible debentures etc.”

If any proposal to fund IL&FS comes in front of the SBI, the bank’s board will consider it on merit and take a call, he informed. “We will get a clear picture by September 29… SBI lends support to NBFCs in private and public sector within the regulatory policy framework and will continue to do so,” Rajnish Kumar said.

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