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Last Updated : Nov 13, 2018 07:57 PM IST | Source:

GIC Re direct debt exposure to IL&FS at Rs 870 crore

The reinsurer will start making provisions for this exposure from Q3 onwards

M Saraswathy @maamitalks
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State-owned reinsurer General Insurance Corporation of India (GIC Re) has a direct exposure of Rs 870 crore in troubled infrastructure lender IL&FS through debt instruments. In its post-earnings analyst call, the reinsurer said the total exposure is Rs 1,152 crore, including an additional Rs 282 crore from the terrorism pool of which GIC Re is a part.

Analysts sought details on the exposure of GIC Re into the IL&FS entities and the provisioning made for the same. This is because several IL&FS group entities have defaulted on debt payments to corporates from June onwards.

Responding to the query, GIC Re's Chief Investment Officer Shashikant More said the defaults occurred in the last week of September and hence, no provisions were made.


"We will make provisions in Q3 for IL&FS," added More. GIC Re does not have any equity exposure to IL&FS.

The first signs of trouble in the IL&FS group emerged in June when it defaulted on inter-corporate deposits and commercial papers (borrowings) worth about Rs 450 crore. Over the next three months, rating agencies also downgraded its long-term ratings. The group has a cumulative debt of Rs 91,000 crore.

Further, IL&FS and group companies like IL&FS Financial Services have defaulted on multiple debt instrument interest payments in September and October.

NCLT approved the takeover of IL&FS board by government nominees on October 1, saying mismanagement at the crisis-ridden financier makes it a fit case for superseding of the board under Article 241 of the Companies Act.

The new board has initiated a process of asset monetisation and is inviting Expressions of Interest for stake sale in IL&FS Securities Services and ISSL Settlement & Transaction Services.

Among financial institutions, State Bank of India has among the largest exposure to IL&FS group that includes both debt and equity. Apart from this, Life Insurance Corporation of India is the largest shareholder in IL&FS with 25.34 percent stake.

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First Published on Nov 13, 2018 07:57 pm
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