Suzlon Energy's Loan Account Classified As NPA By Union Bank; Other Banks Also Expected To Follow Suit Shortly
By : Legal Era
Update: 2019-07-22 05:31 GMT
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[ By Bobby Anthony ]The Union Bank of India has classified Suzlon Energy Ltd's default on the payment of outstanding bonds worth Rs 1,182 crore as a non-performing asset (NPA).Earlier, the Tulsi Tanti-led company had reported a net loss of Rs 6,494 crore in the March quarter on a standalone basis.The Union Bank has updated the status of the account as non-performing in the RBI's...
The Union Bank of India has classified Suzlon Energy Ltd's default on the payment of outstanding bonds worth Rs 1,182 crore as a non-performing asset (NPA).
Earlier, the Tulsi Tanti-led company had reported a net loss of Rs 6,494 crore in the March quarter on a standalone basis.
The Union Bank has updated the status of the account as non-performing in the RBI's Central Repository of Information on Large Credits (CRILC) database in the quarter ended June 30, after repayments were delayed by more than 90 days.
CRILC is a borrower level supervisory dataset with a threshold in aggregate exposure of Rs 50 million.
More banks are likely to follow suit and classify Suzlon’s loans as a non-performing asset.
The company boasted a consolidated net term debt of Rs 7,761 crore and a working capital debt of Rs 3,380 crore by the end of FY19.
Other lenders to Suzlon Energy include Bank of India, Bank of Baroda, Central Bank of India, IDBI Bank and Punjab National Bank.
The NPA tag by Union Bank is expected to force these banks to set aside money to cover potential losses on their respective exposures.
Under the RBI's asset classification guidelines, banks have to set aside 15 per cent of their outstanding loans to an NPA account as provisions against a mere 0.4 per cent for standard accounts.