I am a shareholder in SREI Finance? Is there something wrong with the company?

Unfortunately, a lot of things are going wrong with SREI and the company may also be referred to bankruptcy in something similar to the RBI sponsored DHFL resolution scheme. Just few days back, the lending banks had adjusted Rs.3,000 crore from the trust and retention account (TRA) against dues of the previous 10 months. However, now banks are not happy with the NPA situation and want a RBI driven insolvency resolution.

The problems are many. SREI had debt of Rs.28,000 crore and cash flows are negligible. At the same time, in the previous year, the RBI audit had flagged a probable related party transaction of inter-party lending to the tune of Rs.8,576 crore. Meanwhile, SREI was firm about not being referred to the IBC as it had promised to pay all the creditors in a structured and phased manner to the full extent.

SREI pointed out that, apart from the Rs.3,000 crore adjusted from the TRA, the banks also had access to their substantial current account balances. They have sought time and a debt realignment but the banks may soon run out of patience. Out of the total debt of Rs.28,000 crore, nearly Rs.18,000 crore is debt to banks and the balance is debt to creditors. SBI has already classified loans to the SREI group as a bad loan. But situation is grim.