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Tag: defaults

Reliance Home Finance defaults on Rs 40 crore loan repayment to Punjab & Sind Bank

Reliance Home Finance defaults on Rs 40 crore loan repayment to Punjab & Sind Bank

Finance
Ltd (RHFL) on Saturday said it has defaulted on loan of over Rs 40 crore from Punjab & Sind Bank even as the company has enough cash and cash equivalent which it cannot use due to a court order. The Anil Ambani-controlled Reliance Capital's subsidiary defaulted on loan on February 15, 2021, and the current amount of default is Rs 40 crore alongside an interest of Rs 15 lakh. The company's total obligation is of Rs 200 crore on a 5-year tenure secured term loan at 9.25 per cent per annum from Punjab & Sind Bank, RHFL said in a regulatory filing. The company has net cash (including cash equivalent, liquid mutual fund investments, fixed deposits etc) of more than Rs 1,500 crore, it said. "However the delay in debt servicing is due to prohibition on the company to dispose of, alien...
Millions of defaults threaten microfinance’s future in India

Millions of defaults threaten microfinance’s future in India

Finance
In February 2020, unaware the coronavirus pandemic was about to wipe out her livelihood, Arpita Das borrowed Rs 1,60,000 to buy materials and equipment for her family fishing business in West Bengal. A few weeks later, demand for her prawns collapsed, leaving her unable to make the around Rs 12,800 monthly repayments to two microlenders. The 33-year-old mother of two, who’d never missed a payment since she started borrowing three years earlier, is now living off the vegetables and grains she grows on a plot of land outside the home she shares with her husband and his parents. With the whole family out of work, they’re unlikely to have any income unless she can borrow about Rs 1,00,000 for this year’s prawn harvest. During India’s initial three-month lockdown, one of Das’s lenders would cal...
Reliance Capital defaults on interest payments on HDFC and Axis term loans

Reliance Capital defaults on interest payments on HDFC and Axis term loans

Finance
Anil Ambani-led Reliance Capital defaulted interest payment on its Rs 690 crore of outstanding borrowings from Housing Development Finance Corporation (HDFC) and Axis Bank. The amount includes accrued interest up to October 31. The company informed the exchanges that it failed to pay interest of Rs 4.77 crore to HDFC and Rs 0.71 crore to Axis Bank on October 31 as it was unable to proceed with asset monetisation due to various legal barriers, it said in a regulatory filing on November 27. Reliance Capital's total indebtedness amounts to Rs 20,077 crore including accrued interest at the end of October 31. "The company is unable to proceed with asset monetization resulting in delay in debt servicing, due to prohibition on the company to dispose off, alienate, encumber either directly or ind...
Complete IBC suspension for defaults may hurt creditors

Complete IBC suspension for defaults may hurt creditors

Finance
The government's ordinance giving a perpetual holiday from the Insolvency and Bankruptcy Code (IBC) for defaults between March and September has left banks and investors in a lurch as it leaves them with only recovery options which have proven to be ineffective. Lawyers say that a complete suspension of IBC cases for defaults occuring during the six month period is regressive and takes away the fear of default from promoters. Particularly hit will be investors in market intruments like bonds, external commercial borrowings (ECBs) and trade credits which have recourse only to the delay prone ebt recovery tribunals (DRTs). Moreover, the illconceived ordinance could put India back on eyes of international investors who bet on legal frameworks for recoveries and hit fund raising through bond s...
Govt increases loss coverage for micro loan defaults to 75% from 50% earlier

Govt increases loss coverage for micro loan defaults to 75% from 50% earlier

Finance
New Delhi: The finance ministry has increased coverage of a lender’s loss in case of loan default under the Credit Guarantee Fund for Micro Units (CGFMU) scheme to 75%, from 50% earlier. The amendment to the scheme, notified on Thursday, is aimed at incentivising lending to micro businesses which are bearing the brunt of the coronavirus outbreak and the ensuing nationwide lockdown. “It will incentivise lending institutions to give credit as their losses from defaults on loans will be protected to the extent of 75%,” said Anil Gupta, head of financial sector ratings at ICRA. The CGFMU scheme, announced in April 2016, covers micro loans up to Rs 10 lakh extended under the Pradhan Mantri Mudra Yojana. Lenders can pay a fee for the portfolio of loans they want to be covered by the guarantee, ...