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market | IST

Bank's exposure to IL&FS group is at 0.35% of loans, says Karnataka Bank

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The National Company Law Appellate Tribunal (NCLAT) has barred banks and financial institutions from declaring the accounts of IL&FS and its group companies as non-performing assets (NPAs) without its permission The decision has been taken in the interest of IL&FS debt resolution plan. Mahabaleshwara MS, managing director and chief executive officer of Karnataka Bank assessed the impact on banks.

The National Company Law Appellate Tribunal (NCLAT) has barred banks and financial institutions from declaring accounts of IL&FS and its group companies as non-performing assets (NPAs) without NCLAT's  permission.
The decision has been taken in the interest of IL&FS debt resolution plan. Mahabaleshwara MS, managing director and chief executive officer of Karnataka Bank assessed the impact on banks.
“Any good news is a welcome news for the banking sector. Our exposure to IL&FS group is within 0.35 percent which is around Rs 155 crore. As of December, we had already treated it as a NPA and made provisions accordingly. The impact of this decision is that there will be an improvement over the NPA position because this will get upgraded to a standard category. On account of NCLAT's decision, we will take a view on provision release. It all depends on our ability which we will take a view in due course,” he said.
In terms of bank’s exposure to DHFL and to non-banking financial companies (NBFCs), he added that, “As far as our bank is concerned, we have about 15.18 percent exposure to NBFCs as of now. These are all the rated advances. Of that BB, A, AA and AAA constitutes about 98.35 percent and only one account is under BB and another one under D. D category is IL&FS and BB is Religare group accounts. And as far as Dewan Housing Group is concerned, we have about 0.83 percent exposure. As of now, as per the books of accounts, there is no stress, but we are closely watching their statements.”
“We are in active discussion mode with about 4-5 NBFCs which through the buyout road. We are very selective in entertaining that type of proposals but that is one of the areas which is continuously engaging our attention,” said Mahabaleshwara.