- Monday, February 24, 2025
By: Shubham Ghosh
INFORMAL talks are underway to deal with the impact of two rulings by the Supreme Court of India that threaten repayment of loans totalling almost Rs 500 billion ($6.73 billion) to some of the country’s largest banks, Reuters reported citing some informed bankers.
The banking sector in India is already dealing with a high level of bad loans and reduced profits because of the ongoing coronavirus pandemic and any failure to regain the money adds more to its woes.
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The apex court recently blocked India’s Future Group’s $3.4 billion-sale of retail assets to Reliance Industries, putting in peril nearly $2.69 billion the retail conglomerate owes to the country’s banks.
The verdict came after the Supreme Court rejected a petition to allow telecom companies to approach the telecommunications department to renegotiate outstanding dues in the long-running dispute with the Indian telecom players.
According to the bankers, it raises concerns over whether Vodafone India will repay more than $4 billion it owes to the Indian banks.
Two bankers, who refused to be identified, said negotiations were taking place to try to restrict potentially severe consequences.
Earlier this year, loans to Future worth around Rs 200 billion ($2.6 billion) were restructured, giving it more time to repay the dues over the next two years but it was on the premise that Reliance would bail it out, according to the bankers.
Bankers fear they are concerned they will have to take haircuts on the loans of more than 75% if Future is taken to a bankruptcy court.
“The immediate apprehension is that the restructuring deal will fall through for banks by December,” Reuters quoted a banker at a public sector bank that has lent money to Future, as saying.
India’s largest lender State Bank of India, Bank of Baroda and Bank of India are among Future’s leading financial creditors.
The banks are also discussing Vodafone’s debt to lenders of almost Rs 300 billion ($4 billion). Among the top lenders to Vodafone are Yes Bank, IDFC First Bank, IndusInd Bank and other private and state lenders.
At the end of March this year, Indian banks already had total non-performing assets of Rs 8.34 trillion ($112.48 billion), the government has revealed.
