Bankers not willing to recast loans, DCHL withdrawn from CDR

With the two biggest lenders to Deccan Chronicle Holdings (DCHL), ICICI Bank and Axis Bank, not willing to restructure its loans of R4,100 crore, the account is now out of the purview of the CDR cell. The bigger banks believe that it might be a better idea to simply sell off the assets and paper rather than recast the loan. As such, the consortium of lenders will now focus on using the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act and the debt recovery tribunal (DRT) routes to recover dues from DCHL.

?With the lead banker ICICI Bank pulling out of the DCHL recast, it is no more under the ambit of the CDR cell. The remaining lenders have so far not backed a second referral to the cell,? a banker in the consortium said. Meanwhile, Canara Bank continues work on the forensic report in consultation with Deloitte.

However, the thinking at the two largest lenders appears to be that the best strategy is to liquidiate assets since the account has been classified as an NPA.

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A Corporation Bank official said even if DCHL musters enough support for a second referral, it will be difficult for the loan recast proposal to get approved without the support of ICICI Bank and Axis Bank.

A CDR cell restructuring approval requires that 75% of lenders by value and 60% by number agree to the recast.

Canara Bank has expressed reservations in participating in the CDR process as it believes that the lending was not in the true spirit of consortium lending. ?Some lenders were kept in the dark when loans were being given out by certain consortium members,? the Canara Bank official said.

Kotak Mahindra Bank has said it would not like to participate in the CDR process.”We had declared Deccan as NPA last quarter. We normally don’t participate in the CDR as we prefer recovering the amount,” said Dipak Gupta, joint MD of Kotak Mahindra Bank. DCHL was first referred to the CDR cell in September by ICICI Bank and 2-3 other lenders. A second referral of DCHL to the CDR cell must be be backed by lenders with at least 20% loan exposure to the the company, the CDR official said.