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New Delhi, Jan 22 (IANS) On a day when CRISIL downgraded two IL&FS special purpose vehicles and ICRA put six mutual funds on its watch list with negative implications, the government met

Uday Kotak and his team and senior officials of Punjab National Bank, Bank of Baroda, Union Bank and Canara Bank on the sensitive issue of provisioning. In parallel, Union Bank of India

said its exposure to the IL&FS thermal power project could turn into a bad loan in the next quarter if the National Company Law Appellate Tribunal does not modify its order for cash flow

into special purpose vehicles. The lender's exposure to the plant is close to Rs 900 crore, Managing Director and Chief Executive Officer Rajkiran Rai G said. Sources close to

developments said that the government will approach the Reserve Bank of India seeking a special dispensation for deferring provisions that banks need to make for some IL&FS group

companies. The Reserve Bank of India had refused to give any special dispensation to lenders of Infrastructure Leasing & Financial Services Ltd., asking them to classify the loans as

non-performing if they are overdue. At the same time, stressed banks impacted by the IL & FS imbroglio want some sort of interest component to be paid by the beleaguered financial

behemoth so that some semblance of money keeps rolling in. The meeting in the finance ministry was attended by corporate affairs secretary Injeti Srinivas, department of economic affairs

secretary Subhash Chandra Garg and secretary department of financial services Rajiv Kumar. IL&FS and its associated companies have defaulted on loans worth Rs 91,000 crore, leading to a

serious liquidity crisis. The government is seeking relaxation in RBI's tough rules on bad loans to bring IL&FS out of the debt mess. There are some IL&FS companies which are in

a position to repay their loans as they have money in the escrow account. Uday Kotak of Kotak Mahindra Bank was appointed as the chairman of IL&FS in October 2018 when the

company's debt crisis came to be known in August. The Mumbai bench of National Company Law Tribunal (NCLT) had turned down the government's application for a three-month moratorium

for IL&FS and its subsidiaries against legal action by lenders. The appellate court had stayed the order disabling lenders from monetizing the assets. (This story was auto-published

from a syndicated feed. No part of the story has been edited by THE QUINT.)