Indian bankers negotiate as court decisions threaten over $ 6 billion in loans

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MUMBAI (Reuters) – Informal talks are under way over the impact of two Indian Supreme Court rulings that threaten to repay loans totaling nearly Rs 500 billion ($ 6.73 billion) to some of India’s largest banks, bankers close to India’s largest banks. thing to say.

FILE PHOTO: A TV reporter sets up a camera at the Supreme Court building in New Delhi on February 18, 2014. REUTERS / Anindito Mukherjee

Any inability to get the money back exacerbates the stress in the banking sector, which is already dealing with increased levels of problem loans and lower profits due to the impact of the pandemic.

Last week, India’s Supreme Court effectively blocked the sale of $ 3.4 billion by the Future Group of Reliance Industries’ retail assets, jeopardizing the nearly $ 2.69 billion that the retail conglomerate owes Indian banks.

The ruling came a few days after the Supreme Court rejected a motion to allow telecommunications companies to apply to the Telecommunications Department to renegotiate the terms of outstanding debt in a long-running dispute with Indian telecommunications players.

Bankers say this raises concerns over whether Vodafone Idea will pay around Rs 300 billion ($ 4.04 billion) to Indian banks and another billions of dollars in long-term contributions to the government.

FUTURE OF THE FUTURE?

The two bankers, on condition of anonymity, said negotiations were under way to try to limit the potentially serious consequences.

Bankers said nearly Rs 200 billion in loans to Future were restructured, giving him more time to pay off over the next two years, but this was done on the condition that Reliance bailed him out.

The prospective group did not immediately respond to a request for comment.

Bankers fear that if Future goes to bankruptcy court, they will have to cut loans by more than 75%.

“The immediate concern is that the bank restructuring deal will fail by December,” said a banker at a state bank that lent money to Future.

Future’s leading financial lenders include India’s largest lender State Bank of India, as well as smaller rivals Bank of Baroda and Bank of India.

Bank of India, the leading bank for the consortium providing loans to Future, did not immediately respond to an email request for comment.

VODAFONE IDEA

Banks have also begun discussing Vodafone’s nearly Rs 300 billion debt to creditors. Vodafone’s leading lenders include Yes Bank, IDFC First Bank and IndusInd Bank, as well as other private and public lenders.

Vodafone, Yes Bank, IDFC First Bank, and IndusInd did not immediately respond to a request for comment.

“Although banks have the ability to restructure loans in the event of a company default, it will only make sense if there is a clear visibility of cash flows, which is not currently available,” said a senior banker at a state bank, provided that anonymity …

According to the government, already at the end of March, Indian banks had total non-performing assets of Rs 8.34 trillion ($ 112.48 billion). He has not yet provided more updated data.

(1 dollar = 74,2400 Indian rupees)

Report by Nupur Anand; Edited by Barbara Lewis

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