Loan repayment case: Altico Capital, AU Small Finance Bank reach settlement

Non-bank financial company (NBFC) Altico Capital, which had moved the Bombay High Court last month against AU Small Finance Bank (SFB) to prevent the bank from taking any adverse step against it, has reached a settlement with the bank.

Altico, a lender focused on real estate finance, had availed of a term loan of Rs 62 crore from the bank which AU SFB recalled earlier. The bank also withheld Rs 50-crore fixed deposit (FD) that Altico held with AU SFB, following which Altico moved court.

In the settlement, Altico has agreed that the bank can appropriate amounts that fall due for the term loan given to it from the FD of more than Rs 50 crore that it has with the bank.

The bank on its part has agreed it will not prematurely encash the FD. Altico has also agreed that it will not use the FD with the bank to pay off any third party, or use it as security or lien.

In September, Altico defaulted on a repayment of Rs 20 crore to an external commercial borrowing facility from Mashreqbank PSC and subsequently the credit ratings of the realty lender were downgraded to default. Since the default, the NBFC has been engaging with banks on a resolution process.

Delay in fundraising due to challenging extraneous conditions, protracted processing by counterparties involved in monetisation initiatives, rating downgrade, multiple acceleration requests, lien-marking on FD resulted in an imminent liquidity shortfall situation for the realty financier led to the default.