A loan settlement with the National Asset Reconstruction Company Limited (NARCL), the government’s bad bank, has come under the scanner after a significant gap between the admitted claim and the final settlement value was revealed in the resolution of Agson Global Private Limited. Documents related to the resolution of Agson Global Private Limited show that the admitted claim of NARCL and India Debt Resolution Company Limited (IDRCL) in the Axson Global account was around Rs 2,172 crore.
At the time of the resolution process, NARCL reportedly had 100 per cent voting rights in the Committee of Creditors (CoC), making it the sole decision-maker on behalf of financial creditors.
However, the account was eventually settled for around Rs 579.24 crore, comprising Rs 550 crore towards principal and Rs 29.24 crore as delayed interest. The settlement amount is substantially lower than the admitted claim figure, resulting in a difference of nearly Rs 1,593 crore.
The documents indicate that Agson Global had accumulated substantial debt from banks, which was later transferred to NARCL and IDRCL under the bad-bank framework. Following the transfer, NARCL emerged as the sole secured financial creditor in the account and exercised complete control over the settlement process through its voting rights.
The settlement itself has not been alleged to be illegal. But the difference in the sum claimed and the settlement figure ultimately arrived at has led to questions being raised over the valuation process and the basis on which the final figure was arrived at.
One of the key issues raised is whether there is a public record that explains the price discovery process used in the settlement. Questions are also being asked about how the value of the underlying assets and recoverable dues were estimated before the final settlement was given the nod.
The issue has drawn comparisons with the earlier high-profile debt resolution cases like that of Delhi’s Hyatt Regency hotel. In that case, the valuation and settlement terms were eventually taken to the Supreme Court which sought details relating to asset valuation, original banking records and outstanding liabilities before its further course of action. The matter remains under judicial consideration.
Efforts were reportedly made to obtain NARCL’s response to the questions raised in the investigation. According to Zee Media, a detailed questionnaire was sent to NARCL through email on June 1 seeking clarification on multiple aspects of the Agson Global settlement. The network said it waited until June 9 for an official response.
When no reply was received, a Zee Media correspondent visited NARCL’s Mumbai office on June 10 in an attempt to seek comments from company officials. However, no formal response was provided.
The investigation team has also said that it is trying to bring the matter to the notice of the Ministry of Finance so that the issues pointed out in the report can be looked into by the relevant authorities.
At present, NARCL has not responded publicly to the questions raised about the Agson Global settlement. Whether the transaction was done at a valuation process that protected the public money adequately remains a matter that could attract further scrutiny if further information comes to light or regulators decide to look into the case.
