Banks are expected to review debt recast packages of over Rs7,000 crore granted to companies admitted to the CDR cell in 2012 which includes considering appointing two nominee directors on the companies’ board and a financial controller to monitor the implementation of the package.
The move comes after the finance ministry wrote to the CDR cell warning banks against taking on their books quasi-securities such as convertible preference shares that have long tenures, low returns, and high provisioning. The committee of Banks will review the debt recast package passed for various corporates, including HCC and Hotel LeelaVentures. In April, the CDR cell had received 14 proposals from the corporates to restructure debt.
View: In the recent restructuring cases ( infra, aviation, media companies ) the banks had to take higher NPV hits. Therefore the banks are reviewing the CDR cases to ensure better servicing of loans by companies. However weak economic environment will continue to add pressure on asset quality and slippages from restructured loans.
....more info
The move comes after the finance ministry wrote to the CDR cell warning banks against taking on their books quasi-securities such as convertible preference shares that have long tenures, low returns, and high provisioning. The committee of Banks will review the debt recast package passed for various corporates, including HCC and Hotel LeelaVentures. In April, the CDR cell had received 14 proposals from the corporates to restructure debt.
View: In the recent restructuring cases ( infra, aviation, media companies ) the banks had to take higher NPV hits. Therefore the banks are reviewing the CDR cases to ensure better servicing of loans by companies. However weak economic environment will continue to add pressure on asset quality and slippages from restructured loans.
....more info