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BoI wants restructuring of Tata Finance loans

George Smith Alexander

Bank of India, the lead banker to Tata Finance Ltd, is pressing for a loan restructuring against the backdrop of the recent crisis involving the company and its erstwhile subsidiary Niskalp Investment & Trading Company Ltd. A BoI team, led by its general managers, is expected to meet the Tatas on Friday.

According to sources, BoI's total funded and non-funded exposure to Tata Finance is pegged at over Rs 3.60 billion.

A part of the Rs 560 million term loan which was secured by Tata Finance from BoI on the hypothecation of aircraft has been shown on its erstwhile subsidiary Niskalp books which BoI wants to be transferred to the parent company.

A banking source said Rs 130 million has been shown on Niskalp books and BoI wants the Tatas to transfer it either directly to Tata Finance or any of its subsidiaries.

"Tata Finance is in discussion with BoI regarding rearrangement of its loans to the company and its associates," said a Tata spokesperson.

Tata Finance managing director Subodh K Shah recently met the BoI brass and discussed the issue.

The Tata group has reportedly told the bankers that the company will honour all Tata Finance liabilities. The group is in the process of meeting the bankers separately to discuss Tata Finance's liability structure in the wake of the crisis triggered by alleged criminal activities of a few former company executives.

The total secured loans of Tata Finance as on June 30, 2000 is Rs 7.97 billion. These also include non-convertible debentures of Rs 2.62 billion, Rs 4.21 billion loans from bank on cash credit and demand loans and the remaining term loans from financial institutions and banks.

Tata Finance has also taken short term loans and advances from the bank to the tune of Rs 4.34 billion as on June 30, 2001.

The company's latest exposure to banks is not available as its accounts for the year 2000-2001 (July-June) are being finalised.

The list of bankers to Tata Finance includes Bank of India, Bank of Baroda, Union Bank of India, Punjab National Bank, The Sakura Bank, Oriental Bank of Commerce, Citibank NA, Dena Bank, Development Credit Bank, HDFC Bank, Vysya Bank, Bank of America, Canara Bank, Bank of Nova-Scotia and Development Bank of Singapore.

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