INSUBCONTINENT EXCLUSIVE:
non-performing, two sources with direct knowledge of matter told Reuters on Tuesday.While RBI decision does not come as a big surprise, it
means ILFS's lenders will have to set aside additional capital to provision for soured loans.Bad loans at country's banks reached a
record $150 billion at end of March, with state-run banks accounting for lion's share
The huge pile of bad debt has hurt bottom lines of state-run banks and hindered their ability to issue new loans.In October, government took
control of ILFS, after a string of defaults on debt obligations by infrastructure financing and construction company spooked domestic
markets.ILFS, which has a total debt of Rs 91,000 crore ($12.97 billion), has been trying to sell its assets to repay debt after several
defaults forced government to overhaul its management.Government-owned firms, including Life Insurance Corp (LIC) and State Bank of India
(SBI), own nearly 40 per cent of company
Japan's Orix Corp has a 23 per cent stake and Abu Dhabi Investment Authority 12 per cent.Apart from State Bank of India, other domestic
lenders include Bank of Baroda, Punjab National Bank, and Union Bank of India, among others.One of sources said RBI told lenders to book
loans to ILFS as non-performing assets in December quarter.The second source said RBI's decision was conveyed to banks on Tuesday.The RBI
did not respond to an email seeking comment
SBI and other lenders were not immediately reachable for comment.($1 = Rs 70.1730)
