Mumbai: Lenders to digital education provider Educomp Solutions Ltd are mulling conversion of debt to a majority equity holding under the strategic debt restructuring (SDR) scheme, two bankers in the know confirmed.

Educomp lenders looking at strategic debt restructuring3“Bankers will be conducting a meeting in the second week of January to take a final call on whether SDR needs to be invoked or not. The company is in a delicate state and decisions need to be made quickly,” said one of the two bankers cited above on conditions of anonymity as these discussions are confidential.

On Tuesday morning, CNBC-TV 18 first reported that banks may invoke SDR in the case of Educomp.

The SDR option, introduced by the Reserve Bank of India (RBI) in June, allows banks to convert part of their debt to majority equity in a defaulting firm, allowing them to take operational control. The equity can be held by banks for a period of 18 months, without attracting adverse asset classification on the loan account. Banks need to change management and find a buyer for the asset within these 18 months.

Source: Live Mint

By praful

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