The Economic Times daily newspaper is available online now.

    Piramal, JSW, Tata Power among cos seeking loan moratorium

    Synopsis

    Many large corporations have also taken option to delay their interest payments as the lockdown cripples cash flows and makes the resumption of activity uncertain. As per the RBI guidelines announced on March 27, companies can avail a moratorium on loan installements for March, April and May which can be paid in June. However interest will continue to accrue for these loans.

    RBI---ReutersReuters
    The list of entities, rated by it, include Air India Express, ONGC Petro Additions, entities from Tata Group, JSW Group and GMR Group.
    MUMBAI: Piramal Enterprises, Jindal Steel and Power, JSW Steel Ltd, Air India Express, Bharat Aluminuim Co Ltd (BALCO), Tata Power and even micro company CreditAccess Grameen Ltd are among the 328 companies that have lined up to seek moratorium on loan payments with banks as notified by Reserve Bank of India (RBI), rating agency ICRA said in a note.

    Many large corporations have also taken option to delay their interest payments as the lockdown cripples cash flows and makes the resumption of activity uncertain.

    As per the RBI guidelines announced on March 27, companies can avail a moratorium on loan installements for March, April and May which can be paid in June. However interest will continue to accrue for these loans.

    "Missed payment by these entities even in the case of pending formal approval from the lending institutions prior to the original due date, is not considered an instance of default," ICRA said.

    The list released by ICRA also mentions entities that have received an in-principle approval from investors in their market instruments like non-convertible debentures, commercial papers etc.)—prior to the original due date—for shifting the original due date ahead, but where a formal approval from the investors was received either after the original due date or is still pending to be received.

    Bankers say many large companies are also opting for the moratorium because they want to conserve cash flows because of the uncertainties facing them.

    "There is no cash flow now but more importantly future cash flows are also likely to be hit. Large companies want to protect themselves from that and sit on as much cash as possible," said a public sector banking executive.

    Some large companies are raising money from the markets to increase their cash position as a protection against volatility. L&T for example raised close to Rs 7000 crore by selling bonds ranging from one year to 10 years maturity as a part of its plan to double its cash position to Rs 25,000 crore from Rs 12,000 crore.

    "There are also some companies especially in the power, EPC, hospitality and commodity linked sectors which were already facing trouble in making payments. They will surely want to use this breather from the RBI and try to set their houses in order," said another public sector bank executive.

    ICRA said more names will be added to the list and will be subequently made public as lenders and investors agree of offering of moratorium.


    (You can now subscribe to our Economic Times WhatsApp channel)
    (Catch all the Business News, Breaking News, Budget 2024 News, Budget 2024 Live Coverage, Events and Latest News Updates on The Economic Times.)

    Download The Economic Times News App to get Daily Market Updates & Live Business News.

    Subscribe to The Economic Times Prime and read the ET ePaper online.

    ...more

    (You can now subscribe to our Economic Times WhatsApp channel)
    (Catch all the Business News, Breaking News, Budget 2024 News, Budget 2024 Live Coverage, Events and Latest News Updates on The Economic Times.)

    Download The Economic Times News App to get Daily Market Updates & Live Business News.

    Subscribe to The Economic Times Prime and read the ET ePaper online.

    ...more
    The Economic Times

    Stories you might be interested in