Synopsis: The NCLT earlier granted SREI Group relief in December 2020, but after overturning its decision banks are to classify the loans as NPAs by the end of this quarter.
In recent years, SREI has been troubled by a slew of issues. Two rating agencies recently downgraded it to junk status.
After the National Company Law Tribunal (NCLT) overturned a prior judgement prohibiting banks from classifying a Rs 35,000 crore loan issued to the SREI group as a non-performing asset (NPA), banks may do so by the end of this quarter, in September.
“We were expecting SREI to be classified as NPA and, hence, had already started setting aside provisions,” a top banker at a large public sector bank told Mint.
Indian Bank and Canara Bank have exposures to SREI Group of Rs 2,000 crore and Rs 1,200 crore, respectively, while ICICI Bank and Axis Bank have exposures to SREI Group of Rs 800 crore each.
SREI Infrastructure and SREI Equipment Finance, two of the company’s group entities, have been negotiating a merger since 2019.
SREI was given relief by the NCLT in December 2020, when it directed banks and financial institutions not to take coercive action against the firm after it contacted the NCLT bench demanding a suspension on coupon payments and a deferral of redemption dates until the merger was completed.
However, UCO Bank and the Reserve Bank of India filed an appeal at the NCLAT against the ruling.
Meanwhile, according to its annual report, SREI Infrastructure Finance is working on deleveraging its balance sheet and decreasing stress on its books through recoveries and portfolio sell-downs.
The non-banking financing corporation (NBFC) with its headquarters in Kolkata is in the process of raising equity capital from foreign investors.
The company’s board of directors approved raising up to Rs 2,500 crore through a variety of methods, including qualified institutional placement, in July.
Srei Equipment Finance Ltd, the company’s subsidiary, had previously received a total investment proposal of Rs 4,200 crore from US and Singapore-based investors.
