Reliance Capital misses NCD payment on April 22

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Published: April 24, 2020 3:30 AM

In September 2019, CARE Ratings had downgraded Reliance Capital’s Rs 17,000-crore debt to default grade ‘D’. The agency attributed its action to the company delaying by a day its payment on several NCDs it had issued.

Reliance Capital, Anil Dhirubhai Ambani Group, Reliance
In September 2019, CARE Ratings had downgraded Reliance Capital’s Rs 17,000-crore debt to default grade ‘D’.

Reliance Capital failed to make payment for non-convertible debentures (NCDs) maturing on April 22, the company informed the stock exchanges through a release.  According to PRIME Database, Reliance Capital needed to make payment of Rs 1,070 crore for NCDs maturing on Wednesday.

The company also cautioned investors that there will be a delay in debt servicing. “It is expected that the debt servicing of the company in relation to the accelerated amounts and otherwise will be delayed,” Reliance Capital further said in its release.

In September 2019, CARE Ratings had downgraded Reliance Capital’s Rs 17,000-crore debt to default grade ‘D’. The agency attributed its action to the company delaying by a day its payment on several NCDs it had issued. However, Reliance Capital maintained that the delay in payment was due to a technical glitch on bank servers. The company reiterated its claim in the release issued on late Wednesday, and said, “The downgrade has initiated acceleration of various facilities and consequential demands for immediate payment of amounts that were otherwise due and payable in a phased manner over the next eight years.”

The company also cited legal hurdles for not being able to proceed with its asset monetisation. According to a Crisil report, non-banking financial companies (NBFCs) are likely to face liquidity challenges, partly due to poor collections amid the Covid-19 lockdown. NBFCs have debt obligations of `1.75 lakh crore till June 2020, as per Crisil. Many lender banks are not providing moratorium to NBFCs on instalments as per the Reserve Bank of India’s Covid-19 package announced on March 27. However, NBFCs are offering their customers a moratorium.

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