HCC, Gammon, Jaiprakash Power & others may face renewed pressure

Mumbai: For several financially stressed companies, Monday’s central bank move to define the endgame road map could ultimately translate into just that – the endgame.

With the bankruptcy resolution goalposts now changing, bankers expect significant additions to the list of accounts they must take to the National Company Law Tribunal (NCLT) unless there is a pronounced qualitative improvement in repayments. The NCLT threat is increasingly real for companies such as Hindustan Construction Company, Gammon, Jaiprakash Power Ventures, GMR Rajahmundry Energy Ltd, and Lanco Teesta Hydro Power Pvt Ltd, which are in various stages of restructuring, according to bankers familiar with the situation.

These are among scores of accounts, either at the holding-company level or at the step-down subsidiary level, which have received a lifeline from lenders through loan restructuring schemes that were scrapped by the Reserve Bank of India (RBI) on Monday.

Banks are expected to crack the whip on many big borrowers, especially those that owe more than Rs 2,000 crore, as they look to minimise the levels of provisioning that they must make in these cases. It could not be independently verified with banks and the likely affected companies.

“With the S4A and SDRs that have not been implemented, banks will have to find a solution. Otherwise they have only 180 days from March to resolve, get it rated and then to continue with it as an NPA until 20 per cent of the dues are paid,’’ said Sunil Srivastava, DMD, State Bank of India. “Or, alternatively, they have to sell it down to an ARC or NCLT or sell it to distressed funds.”

The RBI on Monday put an end to loans restructuring outside the bankruptcy courts, and set tight deadlines for those companies that are just slipping into default. It said all cases above Rs 2,000 crore have to be settled within 180 days, failing which they have to be taken to the bankruptcy courts.

Stressed assets have increased of late, and the top four state-run banks account for nearly Rs 1.37 lakh crore of bad loans — SBI at Rs 50,482 crore, Punjab National Bank at Rs 67,129 crore, Bank of India at Rs 10,633 crore and Bank of Baroda at Rs 9,021 crore.

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