MARKETS RESUME BULL RUN
UNDER PRESSURE Banks will restructure debt or initiate sale for 12 other stressed accounts
MUMBAI: As the deadline set by the Reserve Bank of India (RBI) for resolution of stressed assets ended on Monday, lenders have decided to refer 20 of at least 32 stressed accounts to bankruptcy courts, according to two bankers aware of the matter.
For the remaining 12 accounts, lenders will either restructure the debt or initiate sale proceedings, the bankers said on condition of anonymity.
On February 12, the RBI had set a 180-day timeline starting March 1 for resolving large corporate loan defaults, failing which banks have to refer these cases for insolvency proceedings.
Among the 20 new accounts that will be referred to the National Company Law Tribunal (NCLT), a majority— including Essar Power, Korba West Power Co. Ltd, Jindal India Thermal Ltd and Sravant Energy Pvt. Ltd—are power projects. The list also has metal companies, including BMM Ispat Ltd, ISMT Ltd, BRG Iron and Steel and Splendid Metal Products Ltd. Reliance Naval is also among the companies that will be referred to bankruptcy courts.
Lenders have, however, decided to restructure the outstanding debt of Videocon Oil Ventures Ltd, GMR Rajahmundry Ltd and Jaiprakash Power Ventures Ltd.
Banks have received bids from Edelweiss Asset Reconstruction Co. to acquire two accounts—Coastal Energen Pvt.
Ltd and GTL Infrastructure Ltd. Edelweiss Asset has bid ₹3,200 crore for Coastel Energen and ₹2,400 crore for GTL Infra. The asset reconstruction company is also exploring the option of teaming up with foreign lenders such as Deutsche Bank and Bank of America Merrill Lynch to pay upfront cash.
According to one of the two bankers cited earlier, lenders have decided to sell Prayagraj Power Generation Company to Tata group and ICICI Venturebacked Resurgent Power Ventures and SKS Power to Singapore-based Agritrade Resources.
A Bloomberg report on Monday said Adani Power Ltd is looking to acquire the 1,370-megawatt GMR Chhattisgarh Energy Ltd. The deal is likely to be announced in the next few weeks after lenders give a formal approval, the report said.
Emails and messages sent to a majority of the companies failed to elicit any response. Sravanti Energy declined to comment, as the matter is under judicial review.
The central bank, through its February 12 circular, asked banks to craft resolution plans for defaulted accounts within 180 days in cases where the exposure is more than ₹2,000 crore. The central bank also introduced the concept of a one-day default, under which banks have to identify incipient stress when repayments are overdue even by a day.
Last year, lenders referred a total of 40 large corporate accounts worth ₹3.5 lakh crore to NCLT for initiating insolvency proceedings.