Kishore Biyani’s Future Group faces NPA risk on loans over Rs 20,000 crore
Future group | Photo credit: BCCL
New Delhi: Pressure has increased on the Future Group led by Kishore Biyani as more than Rs 20,000 crore in loans to the group may be on a watch list or classified as non-performing assets (NPA) by lenders because these huge contributions far exceed the 90-day late payment for bad debts.
The cash-strapped group is in talks with lenders for a one-time loan restructuring. Additionally, Biyani is technically in default and the Insolvency and Bankruptcy Code (IBC) suspension ended on March 31. Additionally, the Reserve Bank of India (RBI) moratorium is no longer available and lenders will have to mark the exhibit as a toxic ready on April 1.
“A resolution plan is underway and banks have until April 26 to approve it. However, there is no status quo in classifying these loans as NPA. If the restructuring is successful, the banks may well write off provisions, but until then the loans can be classified as NPA, ”said a senior bank official with knowledge of the matter. HEY.
The Lender to Future group, which runs the Big Bazaar, Brand Factory and Central, is working under the new Covid-19 debt overhaul program established by prominent banker KV Kamath. As part of the process, the indebted group receives an RP4 rating from a rating agency, the minimum rating required by a company seeking resolution. Previously, the umbrella bank had asked companies wishing to overhaul to be assessed by at least one rating agency.
The financial daily quoted a second banker as saying that the restructuring process is underway and that banks “are developing the treatment of debt held by lenders and investors.” He added that lenders can rewrite the provisions they make if they mark those debts as NPA whenever the plan receives the green signal from the Kamath panel.
According to RBI rules, banks must make a 15% allowance on secured loans declared as NPA. As part of Future’s restructuring process, the banks had signed an intercreditor pact, providing for a 10 percent provision as required by the banking regulator.
A senior official at Future Group tried to show some courage, saying the company was close to working out a plan with the banks by April 26. “We have the notes and are in contact with the lenders on the plan. We are convinced that this will pass and that the banks will not have to label us as NPA, ”he said according to the publication.
In August billionaire Mukesh Ambani, controlled by Reliance Industries (RIL), announced the acquisition of companies from Biyani’s Future Group for Rs 24,713 crore in a bid to expand his retail business.
At present, however, the deal is uncertain as online retail giant Amazon, which has a 49% stake in Future Coupons, a holding company of the Future Group, opposed the deal and brought proceedings before the Singapore Arbitration Tribunal, which ruled it should be suspended pending a final verdict.