Defaulting promoters may get lifeline, lenders may defer pledged share sale

Several promoters who have to face March 31 to repay their loans or lose control of their businesses should get a lifeline with public sector lenders planning a “thorough restructuring” of their loans.

A banker has said that loan restructuring may be necessary for some companies whose shares have been pledged as credit collateral and are struggling to meet regulatory standards such as maintaining coverage. “But it is not a global policy and will be implemented on a case-by-case basis,” he added.

A senior official at the State Bank of India has stated that changes in reimbursement made in restructured cases will not be considered a second restructuring. “There is a disruption for three months due to which lenders can change schedules on a case-by-case basis,” said the official.

In addition, the granted accounts will be subject to prudential review to verify their justification due to the economic spinoffs from Covid-19. “The intention is very clear not to push a non-performing asset under the carpet. Wherever there is a real need, banks can go ahead with whatever they want to do, “said the SBI executive.

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At the moment, no new default has occurred in the SBI, but the banking system is preparing for companies in difficulty.

While banks may ease the sale of pledged stocks of failing companies, non-bank finance companies may not adopt a similar strategy. The NBFCs have already started selling stocks of companies in default.

Last week, several NBFCs began selling shares in the Future group after the promoters had not provided more guarantees on their loans.

The total market capitalization of the group’s listed companies fell to 10,740 crore rupees, compared to 42,000 crore rupees declared a year ago. At the same time, the value of the promised shares fell by half to Rs 8,100 crore a year ago to Rs 3,868 crore currently, which made the NBFC tremble.

“We asked the promoter several times to provide more guarantees, but as this was not provided, we had to sell its shares on the market,” said an official from an NBFC. The Future group has promised to sell its insurance business to pay off loans and is in talks with various potential investors. But due to the pandemic of the Corona virus, these talks are delayed.

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