Members of a 15-bank consortium have begun the process of recovering overdue loans from the Winsome Group, with some lenders issuing notices to the company under the Sarfaesi Act and others moving to declare it a wilful defaulter.
The consortium is trying to recover around R4,000 crore in loans, which have been classified as non-performing assets (NPA). The total exposure to the two group companies ? Winsome Diamonds and Forever Precious Jewellery and Diamond ? stands at R6,000 crore. Two senior officials at Punjab National Bank (PNB) ? which has an exposure of R1,600 crore to Winsome ? confirmed that a notice invoking the Sarfaesi Act has already been sent out. A meeting of the consortium is likely to be held shortly to take the process further.
The Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Act, 2002, is seen as one of the more effective ways of recovering bad loans. In cases of consortium lending, the Act allows the recovery process to begin after lenders holding 60% or more of the outstanding debt amount agree to it.
Along with a recovery notice, PNB has also served the company with a wilful defaulter notice, as the bank has found prima facie evidence of diversion of loans for ?other purposes?, said a senior banker at PNB. Once declared as wilful defaulter, the promoter’s ability to access financing from the banking system would be severely restricted.
?So far, four banks have sent us notices for repayment. Bank of Maharashtra and IDBI Bank have served us loan recall notices, Vijaya Bank has sent a Sarfaesi notice while PNB had sent a wilful defaulter notice later October,? a senior official at Winsome confirmed to FE. While company officials claim that there is no documentary evidence to suggest diversion of funds, they agree that banks have not received all the information they have sought from the promoter.
?The promoter, Jatin Mehta, has not been sharing all the information required by the banks owing to some other legal tangles and this is working against the company in India,? the executive said. Meanwhile, one senior official at PNB added that the consortium has decided to appoint an independent expert to value the diamonds that the bank has joint possession of along with the group, in order to recover part of the dues.
According to sources, Winsome Group is one of the top 30 non-performing assets that the finance ministry is monitoring. Public sector lenders have become aggressive in recovery of bad loans after the finance ministry asked them to ensure that recoveries are higher than write-offs.