Banks consider seeking regulatory forbearance
27 Sep 2014 1:18 AM GMT
Mumbai: Bankers on Friday discussed the ramifications of the Supreme Court's order cancelling allocation of coal blocks, and indicated that they may seek ‘regulatory forbearance’ if the ruling impacts asset performance. ‘We have discussed in detail about the implications of the order. We do have a concern if it results in the non- availability of coal for performing assets,’ Indian Banks Association chief executive M V Tanksale said, after a meeting of the industry lobby's management committee here.
He said there is no need for ‘knee-jerk reaction’ and no immediate decision was taken by the committee. However, in case there is an impact on the asset quality because of the apex court order de-allocating 214 coal blocks, it will be ‘desirable’ to have some forbearance, he added.
‘If we get regulatory forbearance it will be good, but right now we do not know if we need it. It is only two days since this decision was taken,’ he said, adding that none of the affected corporates have come forward asking for help from the lenders till now. ‘We need a little time to work out what is the impact and then we will see whatever dispensation is required,’ State Bank of India's chairman Arundhati Bhattacharya said after the meeting.
‘They've promised that there will be some linkage which will be given. So we have to see at what cost the linkage comes, how it affects the EBITDA margin and then take a decision as to what is required to be done...We are working on the impact, once we understand a little more, then we will ask for some dispensation if required,’ she said.
SBI has exposure of Rs 4,130 crore to companies that will be impacted by the Supreme Court's order. Tanksale pointed out that names of reputed conglomerates like Tatas, Jindals, Birlas are among those affected and therefore it is not a necessary that assets may go for restructuring or turn NPA as the industrial groups will try to protect reputations and credit records.
He said there is no need for ‘knee-jerk reaction’ and no immediate decision was taken by the committee. However, in case there is an impact on the asset quality because of the apex court order de-allocating 214 coal blocks, it will be ‘desirable’ to have some forbearance, he added.
‘If we get regulatory forbearance it will be good, but right now we do not know if we need it. It is only two days since this decision was taken,’ he said, adding that none of the affected corporates have come forward asking for help from the lenders till now. ‘We need a little time to work out what is the impact and then we will see whatever dispensation is required,’ State Bank of India's chairman Arundhati Bhattacharya said after the meeting.
‘They've promised that there will be some linkage which will be given. So we have to see at what cost the linkage comes, how it affects the EBITDA margin and then take a decision as to what is required to be done...We are working on the impact, once we understand a little more, then we will ask for some dispensation if required,’ she said.
SBI has exposure of Rs 4,130 crore to companies that will be impacted by the Supreme Court's order. Tanksale pointed out that names of reputed conglomerates like Tatas, Jindals, Birlas are among those affected and therefore it is not a necessary that assets may go for restructuring or turn NPA as the industrial groups will try to protect reputations and credit records.
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