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Sobha drags HSBC to court over debt restructuring package

Raghuvir Badrinath  |  Chennai/ Bangalore 

Sobha Developers, the publicly-held Bangalore-based real estate developer, has gone to Court against over restructuring of its debt. In the Suit, has averred that went back on its commitments of lower interest rates and waving off the processing and foreclosure fee on a According to Sobha Developers, has breached contract terms, breached Reserve Bank of India Guidelines, breached normal banking practices.

As per legal Suit filed, which has been reviewed by Business Standard, during the year 2008 and 2009 approached for restructuring loans amounting to a little over Rs 170 crore, with interest rates ranging between 14-20 per cent for the restructured loan and which was backed by adequate collaterals. Sobha Developers, in its legal suit against has said that the bank went on to charge 35 per cent as part of the restructuring package, which is against the RBI regulations. During 2008-09, the entire real estate industry was under severe stress from the global slowdown and RBI has given specific guidelines to banks on how to treat the which has been affected in the economic meltdown and has acted against those norms. India declined comment for this article.

In the legal suit, also averred that, HSBC, taking advantage of the conditions in which was placed — particularly on the promise to purchasers to deliver title deeds free from all encumbrances, imposed unilateral terms and conditions which were against the guidelines issued by the Reserve Bank of India for restructuring the credit limits extended to the real estate business and demanded the refund of a little over Rs 6 crore.

Sobha Developers, ever since the downturn, has been aggressively addressing the high leverage issue by going in for a (Qualified Institutional Placement) and then sold part of the land bank. The gearing, which as high as 1.7 times during the downturn, is now at 0.65 times. On the sales front too, has been able to make a good turnaround and is looking at touching sales of Rs 2,000 crore for FY13 compared to Rs 1,500 crore during FY12. Sales realisation during the first quarter was up 26 per cent on a YoY basis, while the sales volume has gone up 25 per cent.

First Published: Fri, July 13 2012. 00:12 IST