Srei Group Crisis | Banks favour RBI-led DHFL-like resolution

Days after banks adjusted Rs 3,000 crore from the the trust and retention account (TRA) against dues in the last 10 months, reports arrived that the banks have favoured Reserve Bank of India-led DHFL-like resolution for Srei Group. Also, banks have sought RBI guidance on resolution for lenders to crisis-ridden Srei Group, reported CNBC-TV18 on October 2.

Among other details, some banks also favour Srei board dissolution and appointment of RBI administrator. However, RBI's decision on the Srei Group resolution matter is awaited. In FY 2020, RBI audit flagged Rs 8,576 crore of probable related -party lending by Srei group.

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Srei Group says the question of IBC does not arise because we have already submitted a debt realignment plan which has been accepted by some creditors. This plan involves paying every creditor their entire dues in a structured manner over time.

"The question of IBC does not arise because we have already submitted a debt realignment plan which has been accepted by some creditors. The plan involves paying every creditor their entire dues in a structured manner over time. in the past 10 months, the banks have collected Rs 3,000 crore through the TRA account. Hence, we are already repaying our loans. So the question of default does not arise. As banks had control over the company's cash flow, we could not pay any other creditors. Nevertheless, the matter is sub-judice since it is with the tribunals and counts," Srei commented after the reports was featured.

"We understand the banks want to follow a set process. However, we are in discussions with them for arriving at a resolution that will allow payments to all creditors and bondholders. In the meantime, the company has collected almost Rs 3,000 crore, which the banks have distributed among themselves besides paying certain operational expenses. Substantial money is also lying in the current account as the company has been making ongoing collections. We hope banks will decide on the debt realignment at the earliest so that the company can pay all its bondholders and other creditors," it added.

Public lender UCO Bank-led consortium has approximately Rs 36,000 crore exposure to Srei Group, while SBI, Bank of India and other have already classified the Group Loans as NPAs in second quarter of FY 2021-22.

Meanwhile, Srei Group is in talks for a debt realignment and lenders are waiting for the outcome of an ongoing forensic audit to take a call on debt realignment.

“Banks have adjusted Rs 3000 crore from the TRA account against their dues in the last 10 months. A sum is also lying in the current account as the Company has been making regular collections. We hope banks will decide on the debt realignment at the earliest so that the Company can pay all its bondholders and other creditors,” said the group spokesperson.

The group’s debt is estimated at Rs 28,000 crore, of which around Rs 18,000 crore is the exposure of banks and remaining other creditors.