Skip to main content

Bankers look for speedy resolution of 28 accounts

By
Bankers look for speedy resolution of 28 accounts
Bankers are looking to speed up the resolution of 28 accounts including Videocon Industries BSE -4.90 %, Jaiprakash AssociatesBSE -1.67 % and Uttam Galva Steel as a December 13 deadline looms. These companies are part of the Reserve Bank of India's second list of defaulters to be referred to bankruptcy proceedings for recovery of more than Rs 2 lakh crore.
The accounts need to be restructured by December 13 or they'll end up in the National Company Law Tribunal (NCLT) for the next step in the insolvency process. At that point, banks will have to provide for losses of up to 50% of the loan value, hitting their earnings.Bankers said this worry may see the accounts of Jaiprakash Associates, Uttam Galva Steel, BILT and Jai Balaji getting recast by the deadline.
Also, in cases such as Ruchi SoyaBSE -1.55 %, Orchid Pharma and Uttam Galva Metaliks, lenders did initiate insolvency proceedings well before the deadline, they said.Senior bank officials said that among the 28 cases resolution is in the final stages for Jaiprakash Associates, while negotiations are on for Videocon Industries.
"These are two large cases in the second list and some lenders have asked for additional time from the regulator," said a senior bank official who did not want to be named.The industry is divided over whether lenders can decide on a resolution plan for Videocon Industries by December 13. Videocon Industries has to repay Rs 43,000 crore while Jaiprakash owes about Rs 26,000 crore.
In June, RBI directed banks to immediately refer 12 large cases to NCLT for resolution. In the last week of August, it released a second list of 28 companies but gave banks time to resolve the loans before resorting to the tribunal. However, if the banks fail to recast them by December 13, they have to refer the cases to NCLT by December 31, RBI said.
RBI also said that if a loan is restructured outside the Insolvency and Bankruptcy Code (IBC), the sustainable portion of the loan has to be qualified as investment grade by at least two rating agencies.
Resolution for Uttam Galva Steel, BILT, Jai Balaji, Jayaswal Neco, Soma Enterprise and Anrak Aluminium is either done or is in the final stages, bankers said. Lenders said that in some of these cases banks have either sold the loans to asset restructuring companies (ARCs) or settled them with the promoters. In the case of Soma Enterprise, lenders have restructured the loan under the S4A or Scheme for Sustainable Structuring of Stressed Assets.
Most lenders have sold loans of BILT and Jai Balaji to ARCs and lenders are in talks with buyers for Uttam Galva Steel.In other cases such as Nagarjuna Oil Refinery, Uttam Galva Metaliks, Orchid Pharma, Ruchi Soya and Unity InfraprojectsBSE 1.02 %, lenders have already initiated insolvency proceedings at NCLT.
The Economic Times, New Delhi, 11th Decmber 2017

Comments

Post a Comment

Popular posts from this blog

Household debt up, but India still lags emerging-market economies: RBI

By
  Although household debt in India is rising, driven by increased borrowing from the financial sector, it remains lower than in other emerging-market economies (EMEs), the Reserve Bank of India (RBI) said in its Financial Stability Report. It added that non-housing retail loans, largely taken for consumption, accounted for 55 per cent of total household debt.As of December 2024, India’s household debt-to-gross domestic product ratio stood at 41.9 per cent. “...Non-housing retail loans, which are mostly used for consumption purposes, formed 54.9 per cent of total household debt as of March 2025 and 25.7 per cent of disposable income as of March 2024. Moreover, the share of these loans has been growing consistently over the years, and their growth has outpaced that of both housing loans and agriculture and business loans,” the RBI said in its report.Housing loans, by contrast, made up 29 per cent of household debt, and their growth has remained steady. However, disaggregated data sho...
Post a Comment
Read more

External spillovers likely to hit India's financial system: RBI report

By
  While India’s growth remains insulated from global headwinds mainly due to buoyant domestic demand, the domestic financial system could, however, be impacted by external spillovers, the Reserve Bank of India (RBI) said in its half yearly Financial Stability Report published on Monday.Furthermore, the rising global trade disputes and intensifying geopolitical hostilities could negatively impact the domestic growth outlook and reduce the demand for bank credit, which has decelerated sharply. “Moreover, it could also lead to increased risk aversion among investors and further corrections in domestic equity markets, which despite the recent correction, remain at the high end of their historical range,” the report said.It noted that there is some build-up of stress, primarily in financial markets, on account of global spillovers, which is reflected in the marginal rise in the financial system stress indicator, an indicator of the stress level in the financial system, compared to its p...
Post a Comment
Read more

Retail inflation cools to a six-year low of 2.82% in May on moderating food prices

By
  New Delhi: Retail inflation in India cooled to its lowest level in over six years in May, helped by a sharp moderation in food prices, according to provisional government data released Thursday.Consumer Price Index (CPI)-based inflation eased to 2.82% year-on-year, down from 3.16% in April and 4.8% in May last year, data from the Ministry of Statistics and Programme Implementation (MoSPI) showed. This marks the fourth consecutive month of sub-4% inflation, the longest such streak in at least five years.The data comes just days after the Reserve Bank of India’s (RBI) Monetary Policy Committee cut the repo rate by 50 basis points to 5.5%, its third straight cut and a cumulative reduction of 100 basis points since the easing cycle began in February. The move signals a possible pivot from inflation control to supporting growth.Food inflation came in at just 0.99% in May, down from 1.78% in April and a sharp decline from 8.69% a year ago.A Mint poll of 15 economists had projected CPI ...
Post a Comment
Read more