The extension of the loans caused the company a loss of Rs 26 crore.
The India Infrastructure Finance Company Limited (IIFCL), a Registered Non-Deposit Taking-Infrastructure Financing Company (NBFC-ND-IFC), a 100% Government of India owned company, is on the bench accused of providing loans to at least two companies on completed projects which caused the company a loss of Rs 26 crore.
According to the Comptroller and Auditor General of India’s (CAG) audit report accessed by The Sunday Guardian, “The IIFCL sanctioned and disbursed two loans under the Take Home Finance Scheme without ensuring compliance with the essential requirement of obtaining a “certificate of no objection” from the Concession Authorities, and without guaranteeing the debt service capacity required of the borrowers from their audited annual accounts.”
The CAG in its audit report also mentioned that appropriate action must be taken against IIFCL for granting loans to these companies without following established guidelines and procedures. In its report, the CAG noted: “Due to non-compliance with the provisions of its own credit policy, the IIFCL extended the loan in the projects which had already been terminated and consequently suffered a loss of Rs 26 .20 crore (Rs 13.59 crore plus Rs 12.61 crore written off) CAG recommends that liability can be fixed for breaches flagged by the audit.
According to the 2012 IIFCL Credit Policy, the company, for earmarking take-out financing, ‘The No Objection Certificate (NOC) from the Lender(s), Concession Authority (CA) (if applicable) and consortium, must be provided to IIFCL for the extension of take-home funding under the program. This AC must be arranged by the borrowing company or lender(s) prior to the expected date of occurrence of the withdrawal.
However, the IIFCL in its report to the CAG said they formed two internal committees to investigate its officials’ involvement in the matter and found “no wrongdoing” on the part of officials at the CAG. IIFCL for sanction. However, the CAG had raised a strong objection to this comment from the IIFCL and stated that “the reports of the two committees were not made available to them for further analysis, which raised doubts as to the credibility of these reports.
In this case, IIFCL had sanctioned loans to two companies – Raipur Waste Management Private Limited (RSWPL) and Bhilai Durg Waste Management Private Limited (BDWPL) – both registered in Chhattisgarh and incorporated in 2012. These two companies are also implicated. in sewers and waste disposal, sanitation and similar activities.
It is also pertinent to mention here that these two companies have the same directors who run the business. The directors of these two companies are Vinod Kundukad Mani Kumar and Manoj Choolapurakal Venugopal, both of whom are also directors of several other companies together.
IIFCL had provided a loan of Rs 13.59 crore to RSWPL, while also providing a loan of Rs 12.61 crore to BDWPL. These two loans were disbursed on the same day by the IIFCL. The granted and subject loans were granted to these two companies in December 2014. The two companies – RSWPL and BDWPL – were contracted by Raipur Municipal Corporation and Bhilai Municipal Corporation for solid waste management in their municipal areas respectively , but their contract with the respective municipalities were terminated before the disbursement of the loan by IIFCL, i.e. in December 2013.
According to the data, IIFCL has so far disbursed loans to more than 58 projects under the take-home finance scheme amounting to Rs 16,413 crore, of which only in eight cases, loans disbursed amounting to one total of Rs 1411.64 crore turned NPA.
The take-home finance program was launched in 2009-2010 by the Department of Finance to stimulate infrastructure projects. This program is managed by IIFCL, which was created as a special purpose vehicle (SPV) to finance infrastructure projects. Government of India infused Rs 500 crore in May 2019 and additional Rs 5,300 crore into IIFCL through recapitalization bonds in March 2020. The authorized capital of the company is Rs 10,000 crore and paid up capital of the company is Rs 9,999.92 Crore. as of November 30, 2020.