The bank’s Rs 1,928-crore exposure to the public-private partnership (PPP) is understood to have been classified as a non-performing asset (NPA) in 2018 and it is currently assessing a restructuring proposal developed by EY India for the company.
Syndicate Bank is planning to seek legal advice with respect to the resolution of its loans to Mumbai Metro One (MMOPL) under the Reserve Bank of India’s (RBI) June 7, 2019 circular, according to sources privy to the development. The bank’s Rs 1,928-crore exposure to the public-private partnership (PPP) is understood to have been classified as a non-performing asset (NPA) in 2018 and it is currently assessing a restructuring proposal developed by EY India for the company.
One of the bankers said that the restructuring plan has been under consideration for some time and the bank was looking for clarity from the regulator about the revised framework for stress resolution. “The company has appointed EY to do a restructuring plan. The bank is examining that. The lenders want to have a legal advisor because in the normal course, we put undue reliance on the advisors appointed by the company. So this time, an independent scrutiny of what has been proposed is being looked at,” he said.
Lenders had been awaiting a fresh framework for resolution of stressed assets after the Supreme Court (SC) struck down the RBI’s February 12, 2018 circular as ultra vires. The revised circular issued earlier this month allows lenders 30 days in addition to the existing 180 days from the date of default to come up with a resolution plan.
Syndicate Bank, which leads the consortium of lenders to MMOPL, on Monday put out a public notice seeking expressions of interest (EoIs) from law firms and legal advisors, without naming the account. “Syndicate Bank, a leading public sector bank, invites EOI for engagement of a reputed Legal Advisor/Law Firms to advise and assist the bank upon resolution plan submitted by one of the borrowers (financed under Public-Private partnership funding model under consortium arrangement) classified as NPA with outstanding liabilities aggregating to Rs 1,928 crore (approx.), under the Prudential Framework for Resolution of Stressed Assets issued by RBI on 07.06.2019,” the bank said in the notice.
The other lenders in the consortium are Indian Bank, State Bank of Hyderabad (now merged with State Bank of India), Bank of Maharashtra, IDBI Bank and India Infrastructure Finance Company (UK), according to MMOPL’s website.
MMOPL is a special purpose vehicle (SPV) incorporated for the implementation of the Versova-Andheri-Ghatkopar Corridor Mass Rapid Transit System (MRTS) project. Reliance Infrastructure (RInfra) holds 69% of the equity share capital of MMOPL, while Mumbai Metropolitan Region Development Authority (MMRDA) holds 26%. The remaining 5% is held by Veolia Transport RATP Asia, France, through a separate joint venture company.
Emails seeking responses from MMOPL and an RInfra spokesperson remained unanswered till the time of going to press.