Earlier this month, NARCL matched Gujarat-based NBFC Raj Radhe Finance’s ₹130 crore challenge with an offer of ₹100 crore to take over the company’s ₹2,623 crore dues, ET reported in its December 5 edition. Told. Now it is learned that the offer is on full cash basis.
“During evaluation of the final bid, it was observed that offering cash would be cheaper account-wise. When an ARC offers Security Receipts, the money which is not available now, they have to discount for future. NARCL’s The calculation came to about ₹180 crore when the SRs were being issued, so it was best to make an all-cash offer, said a person familiar with the transaction.
The chief executive of NARCL did not respond to an email seeking comment till press time.
Bankers said nothing stops NARCL from doing cash transactions, though the company was created to buy bad loans from banks by issuing Security Receipts (SRs) for future encashment and which were backed by government guarantees.
“Yes the mandate is to issue SRs but the rules are silent on full cash and hence RBI ARC the rules apply, which were interpreted to make this decision; With full cash, it is at par with other offers and it is also smaller in value,” said a senior banking official.
To be sure, the creditors of CCC are yet to give final approval for the transaction. But since it is an all-cash deal, it does not require a government guarantee which has been a cause of delay as no transaction has been completed yet. Since starting to buy bad loans from banks earlier this year, NARCL has placed binding bids for 12 accounts with total loans of Rs 67,090 crore, according to finance ministry data. Apart from this, due diligence is being done in 22 other accounts, the ministry said.
Banks are still awaiting the final nod from the government to handle it Jaypee Infratechloan for which NARCL submitted a binding bid in September – the first bid accepted by the banks.
NARCL’s bid for CCC is a recovery of 5% for lenders on the total outstanding amount of ₹2,623 crore, lower than the promoter’s settlement offer of ₹195 crore, which envisaged a recovery of 7.5% for banks .
a group of four lenders led by State Bank of India Even more Bank of Baroda, ICICI Bank And IDBI Bank Creditors of CCC.
This was the second offer by government-backed ARC, a week after a similar bid was made for rice exporter SSA International.
NARCL has raised its offer for CCC twice, initially from ₹60 crore to ₹100 crore and finally equal to challenger Raj Radhe’s offer of ₹130 crore.