Defaulting promoters likely to get a lease of life
Lenders may not sell pledged shares by March-end
Several promoter entities, facing a deadline of March 31 to either pay loans or lose control over their companies, are likely to get a lifeline with the public sector lenders planning a “deep restructuring” of their loans.
A banker said the loan restructuring may be needed for some companies, where shares have been pledged as security for credit, and are finding it challenging to meet regulator norms like maintaining cover. “But this is not a blanket policy and will be implemented on a case-to-case basis,” he said.
A senior State Bank of India official said changes in repayments for restructured cases will not be considered as second restructuring. “There is case of disruption for three months due to which lenders may tweak schedule on case-to-case basis,” the official said.
Further, accounts which have been provided relief are going to be subject to supervisory review for justifiability on account of the economic fallout from Covid-19. “The intention is very clear — not to push any non-performing asset under the carpet. Wherever there is genuine need, banks can go ahead with whatever they want to do,” the SBI executive said.
At present, no new default has happened at SBI but banking system is getting ready. While banks may relax selling pledged shares of defaulting companies, the non-banking finance companies (NBFCS) may not adopt a similar strategy. The NBFCS have already started selling shares of companies that have defaulted to their loans.
Last week, several NBFCS started selling shares of Future group after the promoter entities failed to provide more collateral on their loans.
The total market capitalisation of the group’s listed firms fell to ~10,740 crore from ~42,000 crore reported a year ago. At the same time, value of pledged shares fell by half to ~8,100 crore a year ago to ~3,868 crore currently, which has made the NBFCS jittery. “We made several requests to the promoter to provide more collateral, but as it was not provided, we had to sell its shares in the market,” said an official of a NBFC.
The Future group has promised to sell its insurance venture to repay loans and is in talks with various potential investors. But due to the pandemic, these talks are delayed.