Lenders extend ICA for Reliance Home Finance resolution till June 30

Published: May 12, 2020 8:25 AM

As per June 7 circular of the Reserve Bank of India (RBI), lenders need to extend the time period of the pact if an account has not been resolved within 180 days of signing ICA.

Reliance Home Finance, Reliance Home Finance resolution,ICA, RHF, RBI, NCLT Mumbai, IDBI TrusteeshipThe extension of ICA holds importance as it signals that banks are still hopeful about a possible resolution for RHF.

By Ankur Mishra

Lenders totroubled mortgage financier Reliance Home Finance (RHF) have extended the inter-creditor agreement (ICA) till June 30, 2020, sources in the know of the matter told FE. “First we extended ICA till March in the hope of a resolution, but now it has been extended till June 30,” the source added. The extension of ICA holds importance as it signals that banks are still hopeful about a possible resolution for RHF.

As per June 7 circular of the Reserve Bank of India (RBI), lenders need to extend the time period of the pact if an account has not been resolved within 180 days of signing ICA. The lenders had signed ICA in July last year to resolve RHF. “The resolution of the company depends on the kind of offer we get from management, so far it has not been convincing,” a lender told FE on the condition of anonymity.

Financial creditors have a total exposure of Rs 3,986 crore to RHF. Bank of Baroda (BoB) is the lead creditor to the troubled home financier. The net loss of RHF doubled in the March quarter to Rs 238 crore, compared to a net loss of Rs 110 crore in the same quarter last year.

IDBI Trusteeship had earlier taken RHF to the NCLT Mumbai, claiming a payment of Rs 2,850 crore with interest for the debentures issued by the company. The parent company, Reliance Capital had also been made a respondent in the application on the alleged ground of security provided on its assets up to Rs 707 crore for the debentures of Reliance Home Finance.

SBI Mutual Fund, in November 2019, had completely written down its exposure to RHF, prompting steep cuts in several close ended hybrid schemes of SBI Mutual Fund.

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