The Reserve Bank of India has directed HDFC Bank to fork out Rs 210 crore to Mashreq Bank, which had prolonged a financial loan to genuine estate financier Altico Capital that is searching for central bank acceptance for credit card debt resolution, folks with immediate knowledge of the issue advised ET.
Previous Oct, the indebted non-banking finance business and Dubai-dependent Mashreq Bank had approached the RBI accusing HDFC Bank of violating regulatory provisions by debiting aspect of the cash the business had elevated as a result of exterior professional borrowing (ECB) and parked at the Indian bank.
The RBI and HDFC Bank did not reply to ET’s queries till push time Friday.
On Friday, Altico sought approval from the RBI for its new ownership structure whereby present traders together with Abu Dhabi Investment Council, Clearwater and Varde will cede control to Singapore-based SSG Capital.
“The new operator will not settle for the Mashreq liability on the balance sheet as the money parked in HDFC Bank was not unveiled,” mentioned a banker connected with the resolution exercise.
HDFC Bank, which had also lent dollars to Altico, debited about Rs 200-210 crore from its account by making use of a general lien, ET documented on Oct 13 final calendar year. Altico and Mashreq claimed that the revenue was transferred from the Rs 650 crore ECB that the non-banking finance firm experienced availed of from the Middle East bank and kept at HDFC Bank.
According to the RBI’s learn circular on ECB, debtors are “allowed to park ECB proceeds in term deposits with Advertisement (authorised dealer) Class I banking institutions in India for a utmost period of 12 months cumulatively. These term deposits ought to be saved in an unencumbered position”.
“There is a Chinese wall involving the authorised dealer and a bank. This dollars was ringfenced as it came by the ECB route,” mentioned just one of the persons cited over.
ECB proceeds meant for rupee expenditure must be repatriated quickly for credit to rupee accounts with Ad Group I banking companies in India.
Less than the stewardship of Condition Bank of India, Altico’s credit card debt resolution will support a lot more than two dozen loan companies get well at the very least Rs 2,754 crore out of the whole outstanding debt of Rs 3,872 crore. Beneath the new ownership, all workforce of Altico Capital would be retained.