Of the 33 banks that have an exposure to the Infrastructure Leasing & Financial Services (IL&FS) group, at least one has already classified its exposure to a group company as a non-performing investment (NPI).
Union Bank of India has classified its investment in commercial papers (CPs) of IL&FS Transport Networks (ITNL) as non-performing, sources aware of the matter said. An investment by a bank is recognised as an NPI if repayments on it have been due for more than 90 days.
Icra downgraded the rating on ITNL’s CPs first in July to A2+ from A1 and then to A4 in August. Two IL&FS entities on Monday said they were unable to service their obligations in respect of CPs due on the day. In a filing, IL&FS also said it defaulted on the interest on its non-convertible debentures due on September 22 and 23, both non-banking days, and was payable on September 24.
According to a recent report by investment bank Nomura, the IL&FS group has bank loans worth Rs 57,000 crore on its books, while another Rs 37,000 crore of borrowings are in the form of debentures and CPs. Of this, Nomura was able to identify lenders for about Rs 36,500 crore worth of loans. Public-sector banks accounted for 70% of these loans, with another 10% coming from private banks. The rest was borrowed from the Life Insurance Corporation of India, foreign banks and other large institutions.
As a share of total advances, Punjab & Sind Bank’s exposure to IL&FS was the largest — 2.1% — followed by that of Jammu & Kashmir Bank (1.9%). “Within our covered PSU banks, exposure is high for Punjab National Bank, Bank of Baroda and Union Bank at 50-100 basis points (bps) of their FY18 loan book,” Nomura observed, adding, “State Bank of India’s exposure within the Rs 36,500 crore of IL&FS debt we could locate is very low at just 10 bps of loans, and part of this is already recognized as NPA (non-performing asset) by the bank.”