TAKE OVER OF IL&FS GETS NOD

NEW DELHI: The National Company Law Tribunal on Monday approved an immediate takeover of debt ridden IL&FS Ltd by appointing six government nominees on its board, including eminent banker Uday Kotak, who was named as non-executive chairman of the new board.

The tribunal allowed the union government's interim prayer to reconstitute the board due to mismanagement. The bench said going by the Centre's petition, it was apparent that the "affairs of IL&FS were being conducted in a manner prejudicial to public interest".

The IL&FS has defaulted on payment of loans to SIDBI and along with its subsidiaries has a combined debt of over Rs 91,000 crore. There were concerns that default by a large NBFC like IL&FS would create liquidity crunch in the financial markets.

Apart from Kotak, retired IAS officer Vineet Nayyar, former Sebi chairperson G N Bajpai, ICICI's non-executive chairperson G C Chaturvedi, IAS officer Malini Shankar and senior bureaucrat from CAG Nand Kishore will be part of the board.

The government superseded the IL&FS board as foreign shareholders were hesitant in putting more money unless there is a change in the management. The domestic shareholders had also expressed their concerns in lending to the same management at the helm, the sources said.After the NCLT decision, the finance ministry said IL&FS continued to pay dividend and huge managerial pay outs regardless of liquidity crisis. “The management has lost total credibility. The government stands committed to ensuring that liquidity is arranged for IL&FS to avoid any default,” it said.

A similar sort of situation had played out at the time of Satyam crisis during the UPA term. A management reorganisation was the best way to allay concerns as well as provide some sort of blueprint going forward, sources said, reports CNN IBN.