Deals
Rajan's Crackdown on $59 Billion Bad Loans Means India M&A Surge
- Lenders take control of defaulting companies under RBI plan
- Banks have 18 months to dispose of assets, recover dues
Raghuram Rajan, governor of the Reserve Bank of India.
Photographer: Dhiraj Singh/BloombergThis article is for subscribers only.
Reserve Bank of India Governor Raghuram Rajan’s war on bad loans is set to spur a slew of mergers and acquisitions after he allowed lenders to take control of defaulting companies and sell those assets to recover dues.
The volume of deals in India will jump from a five-year high as banks, racing to meet a 2017 deadline to tidy up books, seek to dispose of their holdings in distressed companies, M&A advisers say. Lenders have already started converting debt owed by 10 firms into equity since Rajan introduced the strategic debt recovery mechanism in June and they have 18 months to find suitors and sign sale deeds.