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Cos Failing to Meet Loan Recast Deadline Mayve to Cede Control
Owners will have to pledge at least 40% stake for loan recast
Companies seeking easier terms on their loans face the prospect of ceding management control to lenders under a new scheme being considered by the finance ministry and the Indian Banks Association (IBA).Further,promoters of a company will have to pledge a minimum 40% of their equity holding with banks for loans to be restructured.And,if the promoter fails to deliver results within the time-frame stipulated in the loan restructuring agreement,banks will take over the companys management as in the case of software services company Satyam,which was later sold to Tech Mahindra.The new approach was discussed earlier this week at a meeting between Financial Services Secretary Rajiv Takru and IBA,which represents state-owned and private sector banks.The finance ministry and banks under the umbrella of IBA have drawn up a list of troubled companies where the new rules will soon be applicable,a senior finance ministry official involved in the discussions told ET.Banks are considering a change in management in case of five companies,said another person aware of the deliberations.Takru declined to comment on the outcome of the meeting,but said the exercise was meant to restore order in the financial sector.We shall restore order through discussions and persuasion, he said.
Economic Times, New Delhi, 03-10-2013