Canara Bank wants to settle Deccan Chronicle debt issue at one go

Ready to withdraw ongoing cases in exchange for a quick settlement

Canara Bank has refused a fresh request by Deccan Chronicle Holdings Limited (DCHL) to restructure its Rs 350-crore loan that remains unpaid. Instead, the bank offered the option of one-time settlement (OTS) to the company promoters, who are neck-deep in civil and criminal cases involving a loan defaults amounting to about Rs 4,000 crore.

Revealing this on Tuesday, Canara Bank’s chairman and managing director R K Dubey said the bank was considering options such as selling the loan to an asset reconstruction company (ARC).

“When the promoters came to us with a request to restructure the loan, we said we will consider to settle (the cases) if they are ready for a one-time settlement of the dues,” Dubey said on the sidelines of a financial sector conclave being organised by industry body Ficci. The company is yet to respond to the bank's offer.

While the bank is open to dropping the cases currently being pursued against the company, in exchange for the one-time settlement, it can’t sell the loan to an ARC without the Reserve Bank of India’s (RBI) approval because the DCHL is facing loan fraud cases, Dubey explained.

According to him, the bank’s loan is only partially secured because some of the securities given by the company were found to be having multiple charges to various lenders. This is how the company’s promoters committed the loan fraud, Dubey alleged.

On being asked about the investigation by the Central Bureau of Investigation (CBI) against DCHL, Dubey said he was not aware of any fresh developments.

Dubey said with the 69 per cent government shareholding, Canara Bank has ample room to raise fresh capital to meet the business requirements in the next few years.