LIC Chairman V K Sharma, after a meeting at the finance ministry, assured that efforts are being made to keep IL&FS afloat. “We will ensure IL&FS does not collapse. We will not allow contagion to spread from IL&FS…All options are open (including raising stake in the company),” he said.

The infrastructure development and finance group has been facing liquidity issues for some time and had defaulted on Rs 1,000-crore debt from Sidbi earlier this month. On September 14, it had again defaulted on a repayment of Rs 105 crore CPs and the next day, it had defaulted on Rs 80-crore inter-corporate deposits (ICDs).

Meanwhile, the finance ministry has maintained that IL&FS Group is independent of the government and the company needs to resolve its issues. Although the government has no holding in the company, some of the state-owned financial firms, including LIC and SBI, are shareholders of the non-banking financial company (NBFC).

“IL&FS is independent of the government. It has independent board and shareholders. So, IL&FS needs to resolve its issues on its own and I think it is capable of doing it,” Economic Affairs Secretary Subhash Chandra Garg had told PTI.

“It has assets, it has liabilities to take care. There might be some temporary mismatch, so it is IL&FS, which will deal with the problem. The government is not involved directly,” Garg had said. IL&FS, which is credited for building the longest tunnel in the country (the Chenani-Nashri tunnel), is sitting on a debt pile of around Rs 91,000 crore and had been downgraded to junk status by rating agencies following the default. Of this, Rs 57,000 crore are bank loans alone, most of which are from state-run lenders.

State-owned LIC is the largest shareholder with a fourth of the firm’s equity, while Orix Corporation of Japan owns 23.5 per cent. Other shareholders include Abu Dhabi Investment Authority with 12.5 per cent stake, IL&FS Employees Welfare Trust with 12 per cent, HDFC with 9.02 per cent, Central Bank of India with 7.67 per cent and State Bank of India (SBI) with 6.42 per cent at the March-end 2018.

In a letter to its employees, IL&FS had claimed that if funds worth Rs 16,000 crore stuck with concession authorities were released on time, it would not have landed in this mess. Meanwhile, IL&FS Financial Services informed stock exchanges that Infrastructure Leasing & Finance Services Limited (IL&FS), the promoter and majority shareholder of the company, has filed an application with the National Company Law Tribunal, Mumbai Bench on 24 September 2018 seeking certain reliefs in connection with filing of a scheme of arrangement under Section 230 of the Companies Act, 2013 in respect of IL&FS.

The company and certain subsidiaries /joint ventures/ associates of the Company (details of which are listed out in the Annexure) which scheme will be prepared in compliance with applicable law and subject to necessary consents of the shareholders, creditors, regulators and the board of directors of the respective entities, it had said.