Over $6b of Indian banks’ loans in possible jeopardy: report

Future's botched sale of retail assets could lead to problems for State Bank of India, other lenders.

Informal talks are in place to deal with the possible fall-out from two official rulings that threaten the repayment of loans totalling nearly $6.73b to some of India's largest banks, sources told Reuters.

Three lenders—State Bank of India, Bank of Baroda, and Bank of India—face having almost $2.69b (₹200b) in loans to fashion and retail conglomerate, Future Group, going bad after the Supreme Court blocked Future Group’s $3.4b sale of retail assets to Reliance Industries.

Two bankers, speaking on condition of anonymity, said negotiations were taking place to try to limit potentially severe consequences.

Loans to Future worth were restructured earlier this year, which gave it more time to come up with repayments due over the next two years—but that was on the premise that Reliance would bail it out, the bankers said.

"The immediate apprehension is that the restructuring deal will fall through for banks by December," said a banker from a public sector bank that has lent money to Future.

Yes Bank, IDFC First Bank, IndusInd Bank, and other private and state-owned banks also have their eyes on Vodafone—or rather, the almost ₹300b it owes them. Sources told Reuters that banks have already begun discussing the loan.

Here’s more from Reuters.

($1 = ₹74.2400)

Photo courtesy of Naveed Ahmed