Finace And Stock

Nabard, Sidbi, IFCI to take a hit from Srei troubles

The National Bank for Agriculture & Rural Development (Nabard), Small Industries Development Bank of India (Sidbi) and are likely to take a hit as the three financial institutions together have about ₹2,000 crore of exposure to Srei Group, the Kolkata-based financier that has been put into administration on Monday by the central bank.

IFCI is a lender to the core sector and infrastructure finance companies. Nabard is the refinance bank for the country’s agriculture needs, while Sidbi primarily supports small and medium enterprises.

Lenders and bond investors at Srei might not be able to recover more than a third of the total liabilities, estimated to be in the vicinity of ₹31,000 crore, as on March 31.

Exposure Levels

In the recent Dewan Housing Finance (DHFL) bankruptcy resolution, lenders and bondholders obtained 5-100% of their dues to the mortgage financier depending on different slabs and nature of instruments.

“Srei group clients include players from infrastructure and mining,” said Nirmal Gangwal, managing partner at Brescon & Allied Partners, which specialises in the resolution of distressed assets. “The mining and infrastructure sectors have been suffering the last 10 years. The big question is how Srei Group could keep their accounts standard, despite all these headwinds.”

The financial institutions didn’t respond to ET’s mailed queries.

Nabard had ₹850 crore in outstanding dues from Srei Equipment Finance, a wholly owned subsidiary of Srei Infrastructure Finance, as on March 31. Sidbi had ₹952 crore of outstanding, while IFCI’s exposure was Rs 177 crore at Srei Infrastructure Finance, banking sources familiar with the matter told ET.

Debt Securities

Srei Infrastructure Finance and Srei Equipment Finance together had around ₹30,800 crore of outstanding borrowings at the end of FY21, shows data from a Mumbai-based institution that deals with debt resolution.

A Srei spokesperson said banks recovered about ₹s 3,000 crore since October last year, when they began controlling the group’s cash flows. Axis Bank, Bank of Baroda, Bank of Maharashtra, Canara Bank, Punjab National Bank, Uco Bank and Union Bank of India are major lenders to Srei.

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