India

India’s government said banks may be asked to lend as much as 6 billion rupees ($94 million) to billionaire Kalanithi Maran’s SpiceJet Ltd., as the indebted airline seeks investment over the next two months to keep flying, Bloomberg News reported. The loans would be guaranteed by Maran and repaid as soon as investment was secured, part of a package of steps to prevent a shutdown that would damage India’s airline industry, the government said in New Delhi late yesterday.

Hindalco is gearing up for a mega debt restructuring drive. CNBC-TV18 learns from sources that over the next one year Hindalco seeks to restructure its debt of Rs 63,000 crore in three phases. Hindalco plans to refinance Rs 6,000 crore debt in the first tranche through dollarising debt. Move may reduce company’s debt cost by up to Rs 150 crore. Going ahead, it may raise ECB issue of up to USD 500 million in the second tranche. Discussions are still on to carve out a plan for the remaining debt. In the third tranche, it will actively look to reduce debt.

The Reserve Bank of India will soon allow banks more flexibility while restructuring corporate loans, The Indian Express reported. Banks will be able to increase their equity holdings above the current cap of 10 per cent in companies undergoing debt restructuring through conversion of loan into equity. RBI Governor Raghuram Rajan said the RBI is planning to unveil two measures to enable more productive loan restructuring. It is considering extending the 5/25 rule for fresh lending.

Reserve Bank of India Governor Raghuram Rajan said banks should have more power to recoup money from defaulters to rebalance a system that’s skewed in favor of large companies, Bloomberg News reported. The Indian credit system is unhealthy and rests on an uneven sharing of risks and profits that overprotects big borrowers and forces state-controlled banks to absorb losses in downturns without profiting in good times, Rajan said yesterday.

A panel set up by the Union finance ministry to help frame a bankruptcy code will submit its suggestions on insolvency in small and medium enterprises (SMEs) by the budget session of Parliament, followed by its report covering the larger corporate sector later next year, Livemint reported. The government is hoping that a bankruptcy framework, along with the various steps taken in the last few months, will improve the country’s ranking in the World Bank’s Ease of Doing Business report. India is currently at the 142nd rank out of 189 countries.

Indian banks have only two quarters left to restructure stressed assets without significantly dragging down their profits—a fact that’s prompting banks to step up the recast of loans that may eventually need restructuring, Livemint.com reported. Effective 1 April 2015, the Reserve Bank of India’s regulatory forbearance, under which banks were allowed to qualify restructured assets as standard, will come to an end. For now banks are setting aside 5% of the value of the loan to cover the risk of default on any restructured assets.

Troubled steelmaker Lucchini said on Tuesday it planned to ask India's JSW Steel to raise its offer of less than $100 million for the Italian company's core assets in Piombino on the Tuscan coast, Reuters reported. Lucchini, Italy's second-largest steel plant by capacity, was previously owned by Russia's Severstal, but it was declared insolvent in 2012 and placed under special administration. JSW so far has made the only binding offer.

Batelco will pursue its former Indian business partner for $212 million it says he owes the company, even though he was declared bankrupt last week, the Bahraini telecom operator said on Sunday, Reuters reported. Chinnakannan Sivasankaran, the chairman of Chennai-based Siva, filed for bankruptcy in the Seychelles after a British court in June ordered Siva and Sivasankaran to pay the money to Batelco's wholly owned subsidiary BMIC. This related to their failed Indian joint venture. The court also issued an indefinite worldwide freeze on the defendants' assets.

The Reserve Bank of India (RBI) is working with the Centre to improve governance in public sector banks, RBI governor Raghuram Rajan said on Wednesday and called for a bankruptcy code to prevent misuse of the system in future. The governor also warned of crony capitalism slowing down the economy, the Hindustan Times reported. “Do we need a bankruptcy code? absolutely! It is something I have been saying for six years in reports that we need a bankruptcy code,” he said.

India's Bhushan Steel Ltd , a debt-ridden company whose managing director was arrested last week in a bribery case, has so far been able to service its loans, its finance director told Reuters on Tuesday. The Central Bureau of Investigation (CBI), India's top crime-fighting agency, arrested Sudhir Kumar Jain, chairman of state-run lender Syndicate Bank Ltd this month over allegations he took bribes to grant loan extensions to Bhushan Steel.