Deccan Chronicle woes: Banks likely to surge in Q2 NPAs

Banks will see a spike in non-performing assets in the second quarter all thanks to the Rs 2300 crore of loans given to Deccan Chronicle. CNBC-TV18's Gopika Gopakumar reports.

Most lenders are likely to classify Deccan Chronicle as non-performing assets (NPAs) as of September 30. CNBC-TV18 understands that Deccan Chronicle, which has debt of Rs 2300 crore, will become a NPA for most lenders, including Canara Bank.
Canara Bank has an exposure of Rs 350 crore to Deccan and the bank has already classified the company as an NPA. Some of the analysts tell that ICICI Bank could also classify Deccan as an NPA on its book as well.
Bankers tell us that the company has not paid the lenders after June 30. Only few banks have received some payment in July-August period. Also, the company has not received majority support from the lenders as of now. The company is coming up for discussion in the CDR meeting, which is slated on October 19. Clearly, that will be a big day when the company will have to take call whether it will be inside CDR.
Most of the lenders are waiting for the forensic audit to be completed. It is already under way but it is likely that it will take a month or two. However, some other big lenders want to kick-start the CDR process because they believe a forensic audit will take a long time and it will be wasting a lot of time before salvaging the company.
There is doubt among bankers whether it is appropriate to the take the company to CDR itself. That is the reason why October 19 meeting is very crucial because some of the lenders are clearly not in support of taking the company to CDR.