Large companies such as JSW Steel Ltd, Tata Power Ltd and Piramal Enterprises Ltd are among at least 328 firms that have applied for a loan moratorium, data compiled by rating agency Icra Ltd showed. Most of the applicants have a relatively safe credit rating of AA, or lower.
While some companies could be facing liquidity issues due to the ongoing nationwide lockdown—which has brought economic activity to a near-standstill—others may be simply looking to conserve cash as they brace for tougher months ahead, said Icra. “These companies believe that preserving liquidity is better till the time there is clarity on fresh funding and sanctioning. You are not assured of timing of the sanction,” said Anil Gupta, vice-president, sector head, financial ratings, Icra.
To be sure, borrowers will have to pay the entire interest accrued during the moratorium period once it is over.
The list includes names of companies that have sought relief from banks, and where approval was received after the due date, or is pending. The list has been published by Icra as part of the new guidelines laid down by the Securities and Exchange Board of India (Sebi) on the relaxation in compliance for default recognition, amid the loan moratorium granted by the Reserve Bank of India. On 27 March, the RBI had allowed banks to defer the payment of instalments on working capital loans, which were due between 1 March and 31 May.
The companies on Icra’s list are from sectors such as hospitality, airport, non-banking financial companies (NBFCs), including microfinance companies (MFIs), hospitals and real estate. Some big names in the hospitality and aviation sectors include Taj GVK Hotels, Lemon Tree Hotels Ltd and GMR Hyderabad Aviation SEZ Ltd. In the steel sector, Jindal Steel and Power Ltd and JSW Steel Ltd have sought moratorium. Real estate major Prestige Group also figures in the list.
NBFCs and MFIs in the list include Indostar Capital Finance Ltd, Piramal Capital and Housing Finance Ltd and Spandana Sphoorty Financial Ltd.
Even as companies queue up for moratorium, banks remain divided over whether NBFCs should be granted the benefit. State Bank of India is not too keen on giving moratorium to NBFCs and would rather have them borrow under the targeted loan term repo operations (TLTRO) window. Some banks, however, said companies in need should be given moratorium. “If there is a need, then we are open to giving moratorium to NBFCs,” said the head of a public sector bank, requesting anonymity.
Banks are also looking at restructuring loans given to firms impacted by covid-19. Bankers said firms will take at least one year to turn around and they will need additional help.
“We are looking at reducing margins, increasing the cover period to 120 days from 90 days and working out the interchangeability between fund and non-fund based loans,” the banker added.
Corporates have raised ₹51,989 crore via bonds and commercial papers since the announcement of the TLTRO facility in March, according to data from the BSE.
Around 27 companies have raised ₹26,666 crore from commercial papers, while 18 have raised ₹25,323 crore via medium- and long-term bonds.
(Above content has been sourced from a news feed)