Religare Finvest's lenders may take a 49% haircut on Rs 58-billion debt

Creditors to a struggling shadow financier, once controlled by former billionaires Shivinder Singh and Malvinder Singh, are finalising a rare debt recast in the sector by writing off almost half of the company’s loans, people familiar with the matter said.

Lenders to Religare Finvest, including State Bank of India, have agreed to take a 49 per cent haircut on its Rs 58 billion ($808 million) debt, the people said, asking not to be identified as the information isn’t public. The restructuring may be implemented as early as the end of January, they said.

Any debt restructuring at Religare Finvest, which is being bought by TCG Advisory Services, would be the first among peers since the credit market squeeze started in 2018. It could also be considered as an early sign of a winding down of that crisis.

The sector’s fate is still far from certain. Other delinquent shadow lenders, including Reliance Home Finance and Altico Capital India, are struggling to rework their debt. Mortgage financier Dewan Housing Finance is facing bankruptcy.

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A representative for Religare Finvest and SBI’s spokesman didn’t immediately respond to requests for comments.

Religare Finvest, which had faced allegations of financial irregularities under the previous owners, had since January 2018 been under the Reserve Bank of India’s so-called corrective action plan. That status restricts the financier from making new loans. Banks will implement the debt recast after TCG injects fresh equity into Religare Finvest, the people said.