Lenders to Reliance Commercial Finance Ltd (RCFL) have invited resolution plans from potential bidders under Reserve Bank of India’s 7 June circular on stressed assets, a public notice showed on Tuesday.
“A consortium of lenders led by Bank of Baroda are desirous of seeking resolution plans from eligible bidders having the adequate technical and financial capability, in respect of the company,” the notice said.
RCFL has been re-branded as Reliance Money, according to its website. The company is a 100% subsidiary of Reliance Capital Ltd, and offers a wide range of financial products including small and medium enterprise loans, loans against property, infra financing, agriculture loans and supply chain financing, it said.
Email queries to RCFL and Bank of Baroda did not elicit any answer.
On 7 May, RCFL’s independent auditors said it is engaged with all its lenders for debt resolution. Its total borrowings, including debt securities, stood at ₹9,812.9 crore as on 31 March 2020, down from ₹10,284.08 crore in the year-ago period.
“The company’s ability to meet its obligations is significantly dependent on material uncertain events, including restructuring of loans and achievement of debt resolution under inter-creditor agreement (ICA) framework that may cast doubt on its ability to continue as a going concern,” the auditors said.
Under ICA, lenders jointly appoint a lead bank, which functions on behalf of the entire group, and crafts a resolution plan to be approved by two-third of its members.
It reported a standalone net loss of ₹852 crore on a total income of ₹332 crore in six months to 31 March. Its finance costs stood at ₹591 crore during the same period.
“The resolution process is being initiated by lenders of RCFL who are signatories to the inter-creditor agreement dated 6 July 2019 and are governed by RBI circular. The lenders comprise approximately 91% of the total outstanding debt of RCFL as on 6 July 2019. The remaining lenders to RCFL comprise mutual funds, pension funds and others, and consent of such lenders may also be required in relation to the implementation of approved resolution plans, depending on the terms of their underlying contracts,” the notice said.
The article was first published on livemint.com