Lenders led by State Bank of India are in the process of reinitiating the auction for Srei Group non-banking financial companies, according to two people in the know.
The Reserve Bank of India-appointed administrator and his advisers are working on redrafting the request for a resolution plan, after the only two bidders refused to pay Rs 150 crore in earnest money deposit, the people told BQ Prime on the condition of anonymity.
Earnest money deposit is a fixed amount of money paid by a bidder to enter a bidding process. Typically, it’s collected as a token amount to show the bidder’s seriousness.
The SBI-led lenders, according to the people cited above, have insisted that they will not initiate negotiation with the bidders unless they pay the deposit.
Bidders, however, have held their stance firmly, because of three main reasons. First, the amount is very high. Second, there is no clarity on how long the lenders can hold on to the funds in case of delay in the resolution process. Lastly, the bidders are also unhappy with the condition that the financial creditors can lay claim to this deposit, in case of even a slight deviation by the bidders.
In the revised plan, banks are seeking earnest money deposit worth Rs 50 crore. But lenders have declined to reconsider the other two issues raised by the bidders. The bidders may continue to hold out on these payments, the second person quoted above said.
SBI and Srei administrator have yet to respond to BQ Prime’s emailed queries.