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PF money at risk due to IL&FS exposure

MUMBAI: Provident and pension fund trusts, that have jointly invested '1000's of crores' in bonds of the IL&FS staff, have filed intervening petitions within the National Company Law Appellate Tribunal over fears that they may lose their money because the bonds come under unsecured debt.

The precise amount at stake is not known since many of those are traded tools. However, investment bankers estimate it to be in 1000's of crores since the infrastructure corporate's bonds - which have been 'triple A' rated - were most well-liked via retirement price range that have a low-risk urge for food but still must get assured returns even when interest rates are low.

According to sources, exempted trusts managing price range of staff of public sector companies similar to MMTC, IndianOil, CIDCO, HUDCO, IDBI, SBI, and electrical energy forums of Gujarat and Himachal Pradesh are among those who have filed petitions. There also are PFs of personal sector companies like Hindustan Unilever and Asian Paints.

In their packages, the price range are calling into question the resolution procedure itself, including Section 53 of the IBC which spells out the order of precedence for distribution of proceeds of the process.

The choice of PFs filing petitions is prone to upward thrust since they have until March 12 to make their utility. So a ways, over 50 price range, managing retirement advantages of over 14 lakh staff, are understood to have exposure to IL&FS. When contacted, IL&FS spokesperson Sharad Goel stated the company would now not remark on the issue.

The quick reason behind worry for traders is IL&FS filing its staff companies into a three-tier classification of Green, Amber and Red.

The corporate has stated that of the 302 entities within the staff, 169 are Indian companies. Of those, only 22 have been known to be in a position to meet all their obligations (Green). Another 10 companies can pay off their secured collectors (Amber) whilst 38 companies are distressed and can not meet their obligations (Red). The corporate stated that 100 entities are still being assessed. If cost is restricted to secured collectors, only banks will receive their dues whilst unsecured bondholders shall be left prime and dry.

IL&FS has been a favourite among PFs because the corporate was once observed to be sponsored via the public sector, as it was once promoted via giants like State Bank of India and Life Insurance Corporation of India.

Also, the company structured bonds to suit the necessities of PFs. Some feel that with the resolution happening as regards to the Lok Sabha election, default to the PFs may just suppose a political color.

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