Banks hit by the Supreme Court order cancelling allocation of coal blocks are considering the option of “regulatory forbearance” if the verdict affects the loan repayment schedule of companies. If the order hits the loan repayment plan of companies, it will be desirable to have some forbearance, members of the Indian Banks Association who attended the management committee meeting said. “We have discussed in detail about the implications of the order. We do have a concern if it results in the non-availability of coal for performing assets,” IBA chief executive MV Tanksale said after the meeting here. Forbearance provides the borrower time to repay the outstanding amount. Banks normally allow borrowers with a history of making payments on time to be granted this option. However, it remains to be seen whether the Reserve Bank of India will allow any forbearance. While tightening the debt revamp norms last year, the RBI had said that existing “regulatory forbearance” would not be available from April 1, 2015. “If we get regulatory forbearance it will be good, but right now we do not know if we need it. It is only two days since this decision was taken,” Tanksale said. The affected corporates have not come forward asking for help from the lenders till now. “We need a little time to work out what is the impact and then we will see whatever dispensation is required,” State Bank of India chairman Arundhati Bhattacharya said after the meeting. “They have promised that there will be some linkage which will be given. So we have to see at what cost the linkage comes, how it affects the EBITDA margin and then take a decision as to what is required to be done. We are working on the impact, once we understand a little more, then we will ask for some dispensation if required,” she said. Stating that there’s no need for knee-jerk reaction, Tanksale said reputed conglomerates like the Tatas, the Jindals and the Birlas are among those affected and therefore it is not a necessary that assets turn NPAs as the groups will try to protect reputations and credit records. There has been no communication between the RBI and the IBA on the issue.
