IL&FS, other NBFCs making timely repayments, says Bank of Baroda chief

Bank of Baroda's exposure to Infrastructure Leasing and Financial Services (IL&FS) and non-bank lenders is 'fully performing' currently, even as the debt-strapped company has defaulted on several of its debt obligations.

Since August, IL&FS has defaulted on multiple repayments of its debt instruments which have had a contagion impact across the banking and largely the non-banking financial company (NBFC) sector.

"As of now, these accounts we have with IL&FS and other NBFCs also are fully performing. Tomorrow what it will be, we will have to talk tomorrow," said PS Jayakumar, MD and CEO of Bank of Baroda.

Of the total debt of IL&FS of Rs 91,000 crore as on March-end 2018, banks have lent about Rs 57,000 crore.

Without sharing any numbers, Jayakumar said his bank continues to lend to NBFCs and housing finance companies (HFCs) despite concerns of more defaults and lack of confidence in the non-banking lenders' market.

“We continue to lend to NBFCs and HFCs in line with our total exposure to them. Some exposures are increasing. Overall, we also have portfolio caps,” Jayakumar said, adding, in due course normalcy gets restored.

NBFCs, which are battling liquidity crisis, plan to approach the government and the central bank seeking support to weather the capital crunch. Finance Industry Development Council (FIDC), a self-regulatory organisation for NBFCs, is set to meet the Reserve Bank of India (RBI) next week and write to the government for support amid restricted access to capital, sources told recently.

According to Jayakumar, “Over a period of time, all performing NBFCs, the good quality portfolio will always have customers.”

On fears of any exposure to NBFCs slipping into non-performing assets (NPAs), the Bank of Baroda chief said his bank is well capitalised to take care of stressed scenarios and bulk of the exposure is at project levels.

Merger process in 4-6 months

On the government-proposed merger of Dena Bank and Vijaya Bank with Bank of Baroda, Jayakumar said all the three banks have approved the merger and it has now been sent to the government for approval through its alternative mechanism.