PremiumMUMBAI: The Reserve Bank of India (RBI) has come across some instances of loans to probable related parties by the Srei group, the lender said in a regulatory disclosure on Thursday.
The central bank had initiated an audit of its books in November last year and Srei said the total exposure to these loans were at Rs8,576 crore as on 31 March 2021.
“RBI, in its inspection report and risk assessment report for the year ended 31 March 2020 has identified ·certain parties as probable connected/related companies," it said.
RBI has directed Srei Infrastructure Finance Ltd, the parent company and Srei Equipment Finance Ltd (SEFL), the subsidiary, to reassess and factor the impact of certain parties during the finalisation of balance sheet for FY21 and to ensure that relevant accounting treatment and appropriate disclosures is done.
“In view of the observations and directions of RBI as stated in the inspection report and risk assessment report, the parent company and SEFL has been advised to reassess and re-evaluate the relationship with the said parties to assess whether they are related parties to the parent company or to SEFL and also whether these are on arm's length basis," it said.
The group said it has taken legal view to determine whether such parties are related parties and based on the legal view, they have come to conclusion that the two companies have no direct or Indirect control or significant influence over such parties.
“Further, in view or the directions, in line with arm's length principles, SEFL is in the process or reassessing and renegotiating terms and conditions with the borrowers and all other borrowers, who have been granted loans with moratorium period and at interest rate which is linked with the cashfows of the project while ensuring that the overall yield is maintained," the statement said.
Meanwhile, Srei Infrastructure Finance also said its board of directors has passed a resolution to raise up to Rs2,500 crore. That apart, Srei Equipment Finance has received a term sheet from Singapore's Makara Capital Partners for an investment of Rs2,200 crore by way of capital and has also received a term sheet from US-based Arena Investors LP for investment of Rs2,000 crore, it added. The company said it has received expressions of interest from several other global private investment firms, including Cerberus Global Investments, Charlestown Capital Advisors, CarVal Investors LP, Varde Partners Asia Pte. Ltd. and Maystone Capital.
While Srei Infrastructure Finance owes Rs11,117.71 crore to banks, Srei Equipment Finance owes Rs16,912.21 crore, according to data from Care Ratings, which has downgraded both Srei firms to default.
A section of lenders has also opposed Srei’s move to consolidate the group’s lending business into Srei Equipment Finance Ltd (SEFL), effective 1 October 2019. They claim it was done without the consent of all lenders who are part of the consortium.
Then, last December, Srei was granted a repayment moratorium by the Kolkata bench of the National Company Law Tribunal (NCLT). Under this scheme of arrangement, the company proposed to make repayments to various categories of debenture holders over various periods.
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