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Report No. 5 of 2014 - Performance Audit on Stressed Assets Stabilisation Fund SASF of Union Government, Ministry of Finance Department of Financial Services

Date on which Report Tabled:
Fri 18 Jul, 2014
Date of sending the report to Government
Government Type
Union
Union Department
Commercial
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Sector Finance

Overview

Industrial Development Bank of India [IDBI] was an apex institution to provide long term finance to industrial enterprises, both in public and private sectors. IDBI ceased to exist with effect from 1 October 2004 and in its place IDBI Bank came into being as an entity registered under the Companies Act 1956. As of March 2004, IDBI accumulated non-performing assets (NPA) which stood approximately at RS 9,000 crore.

In order to acquire by transfer the Stressed Assets of IDBI and for managing these assets with a view to recovering the amounts due, the Government, as settlor1, decided to set up a special purpose vehicle in the form of a Trust. It created a "Stressed Assets Stabilisation Fund" (SASF) for the Stressed Assets of IDBI and SASF Trust Deed was executed in September 2004.

The Government provided RS 9,000 crore in the budget for the financial year 2004-05 for extending loan to the Trust. The transaction effected by the Government of India in acquiring these assets did not involve any immediate cash outgo. GOI provided a loan of RS 9000 crore to the Trust who in turn invested the amount in zero-interest Government Special Securities floated by Government of India and redeemable in 20 years. The Trust assigned these special securities amounting to RS 9,000 crore to IDBI (or its successor IDBI Bank] and in return, acquired 636 NPA/ stressed loan assets with a net loan outstanding (NLO)2 of RS 9,004 crore.

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