ICBC provides $80 million loan to IL&FS for infrastructure projects and creation of subsidiary company in transportation sector

On September 13, 2016, the Industrial & Commercial Bank of China (ICBC) and Infrastructure Leasing & Financial Services Group (IL&FS) signed an $80 million loan agreement for infrastructure projects and the creation of a subsidiary company -- known as IL&FS Transportation Networks Limited (ITNL) -- in the transportation sector. The loan's borrowing terms are unknown. IL&FS is an Indian infrastructure financing company. It faced a severe liquidity crisis in 2018. Between July 2018 and September 2018, two of the subsidiaries of IL&FS Group reported having trouble in paying back loans and inter-corporate deposits to banks/lenders. In July 2018, the road arm of IL&FS was facing difficulty in making repayments due on its bonds. Further, in early September 2018, one of the subsidiaries of IL&FS Group was unable to repay a short-term loan of Rs. 1,000 crore taken from Small Industries Development Bank of India (SIDBI). Also, certain group companies defaulted in repayments of various short and long-term deposits, inter-corporate deposits, and commercial papers. IL&FS failed continuously to service its debt and the imminent possibility of a contagion effect in the financial market led the Central Government of India to move an application under Sections 241 and 242 of the Companies Act, 2013 before the NCLT, Mumbai Bench. It sought the immediate suspension of the Board of Directors of IL&FS and the appointment of specified new directors, on the ground of massive mismanagement of public funds by the erstwhile Board. It was also alleged that the affairs of the company were being conducted in a manner prejudicial to the public interest.

Additional details

1. Infrastructure Leasing & Financial Services Limited (IL&FS) is a systemically important Core Investment Company with the Reserve Bank of India and is engaged in the business of giving loans and advances to its group companies (and holding an investment in such companies). IL&FS has a large number of group companies across various sectors such as Energy, Transportation, Financial Services etc. IL&FS was initially promoted by the Central Bank of India, HDFC Limited and the Unit Trust of India. 2. India’s Life Insurance Corp Ltd is the biggest IL&FS shareholder with a more than 25 percent stake. IL&FS’s other large investors are ORIX Corp of Japan with a 23.54 percent stake, and the Abu Dhabi Investment Authority with 12.56 percent. India’s biggest lender by assets, State Bank of India, also owns a 6.42 percent stake in IL&FS. 3. Phone numbers and email addresses for contacts are listed on page 3 of IL&FS source.

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