Religare Finvest Skips April Installment To Banks, Proposes Debt Resolution Plan
Religare Finvest Ltd. failed to pay installment of principal amount on its loans in April and has proposed a debt resolution plan to banks, according to a statement.
The Religare group company has been going through difficult times in the recent past on account of mismanagement and misappropriation of funds orchestrated by the erstwhile promoters, it said in a release.
This has resulted in the Reserve Bank of India putting Religare Finvest under a Corrective Action Plan in January 2018.
“However, given the inherent asset-liability mismatch, RFL has proposed a debt resolution plan to streamline its liability profile,” the statement said, adding that the reference date for the resolution plan is April 1.
The banks are in the process of seeking internal approval for the resolution plan, it added.
“As per the resolution plan from the reference date, Religare Finvest is in a standstill arrangement and is required to service only interest. The principal installments will be restructured to align with asset maturity profile. In line with this resolution plan, Religare Finvest did not pay the banks the principal installments falling due during April 2019,” the non-banking financial company said.
However, Reliagare Finvest said it had adequate funds from its operations to meet the April installment.
It said despite the RBI action, it has made principal repayments and interest payments of over Rs 4,400 crore till end of March 2019 and banks and financial institutions were kept current by that time.
Further, it said the rating agencies have considered non-payment of the April principal installment as a technical default and downgraded its rating to ‘D’ by ICRA and Fitch.
As a part of the resolution plan, banks have separately appointed two rating agencies for rating the entire resolution plan and the same would be applicable once the plan is implemented.
“The operations and financial position of the other group companies, Religare Housing Development Finance Corporation Limited and Religare Broking Limited are not affected by the impact of this development in Religare Finvest and both are current with all the banks, without any delay in debt servicing,” it said.