Also, loans were sanctioned overlooking proper credit worthiness and given for general and investment purposes and significant number of borrowers were unrated or had poor rating. The erstwhile board failed to exercise oversight over the functions of the entity. While granting loans to group entities, the company did not evaluate the credit risk, repayment capacity and future cash flows. And no mechanism existed for monitoring end use of funds.” Exposures were taken on SPVs of ITNL by assignment of loan originally given to ITNL. As some of the projects of SPVs were terminated, there was no scope of the SPVs generating funds to repay the loans assigned to them, said RBI.

Source: Economic Times June 12, 2019 02:26 UTC