In a damning report, Grant Thornton has highlighted how IL&FS’ committee of directors facilitated round-tripping and ever-greening of loans and also provided credit to stressed companies despite their financial problems being published in the media. These irregular loans add up to Rs 13,290 crore.
The practice of advancing loans to enable the borrower to repay an earlier loan is known as ‘ever-greening’ and is prohibited by the Reserve Bank of India. The bulk of the irregularities amounting to Rs 2,400 crore pertain to loans disbursed to companies that were already facing stress, going by the then prevailing media reports.
The committee of directors approved the loans despite negative remarks by the risk management team and media reports highlighting stress in these companies.
In one case, money was lent to a developer facing a winding-up petition. Out of 16 such cases, in seven IL&FS had already written off the loans or made large provisions. Read More
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