Banks may sell Home Trade collaterals
George Smith Alexander
At least two banks are planning to sell the collateral provided by the beleaguered portal Home Trade to recover the loans given to the company. IndusInd and the Pune-based Janata Shakari Bank have working capital exposure to the company.
According to the Janata Sahkari Bank's CEO, PJ Puntambekar, his bank's exposure to the company was around Rs 30-40 million.
The account is two to three years old and the company has also been regularly servicing the interest.
"We normally take a collateral of government securities or PSU bonds in addition to a lien on the property of the directors. We are planning to send letters to the company to find out what is happening and whether it is in a position to service the loan. If the company does not respond, we will liquidate the securities kept with us as collateral to recover the loan," he said.
IndusInd Bank has an exposure of around Rs 15 million. The account has been with the bank for around three years now and the company has so far not defaulted on its payments.
The bank has a margin of above 50 per cent on the loan. The collateral of the loan is in the form of shares of group companies. Besides, the bank also has a lien on some equipment of the company.
"We are initiating action shortly," said a bank official.
Home Trade had reportedly approached a string of banks for a Rs 400 million loan last year.
"It had approached us with a proposal for a loan of around Rs 400 million. The loan was supposed to be guaranteed by the Nagpur Co-operative Bank, but we did not sanction the loan as we were not comfortable with the balance sheet of the guarantor," said a senior banker who was approached by the company.
The company had also approached a leading public sector mutual fund for placement of preference shares or non-convertible debentures worth around Rs 500 billion.
However, the mutual fund rejected the deal. Home Trade had also approached a financial institution's venture capital division for funding.
SBI Caps had bagged the mandate for managing the initial public offer of Ways India, a Home Trade group company, but the IPO never saw the light of the day.