RBI gives Shapoorji Pallonji Group till June 2028 to meet capital norms for investment arm

Mumbai: The Reserve Bank has granted the Shapoorji Pallonji Group a three-year extension till June 2028 to fulfill elevated capital adequacy norms for its funding firm, Sterling Funding Corp. (SICPL), individuals aware of the matter advised ET.

The regulatory aid comes after the RBI revised a scale-based framework for non-bank lenders. The aid is a key covenant of the group’s latest $3.4 billion (₹28,500 crore) bond issuance, which carries a steep yield of 19.75% and was subscribed to by non-public credit score funds together with Farallon Capital, Cerberus Capital and Davidson Kempner.

The zero-coupon rupee bonds are backed by SP Group’s 18.37% stake in Tata Sons and shares of its actual property arm, Shapoorji Pallonji Actual Property (SPRE), valued at $3.2 billion. The construction, one of many largest such non-public placements by an Indian group, had regulatory latitude as a precondition.

The SP Group had sought the dispensation whereas issuing the high-yield bonds in Might.

SICPL, an RBI-registered NBFC holding a 9.18% stake in Tata Sons, was not too long ago reclassified as a mid-layer NBFC, triggering stricter capital norms.

Beneath the brand new guidelines, it should keep a capital adequacy ratio of a minimum of 15% of risk-weighted property. At the moment, the NBFC has a ratio of simply 7% with whole capital of round ₹1,000 crore. It now must greater than double this to ₹2,100 crore inside the subsequent three years.”RBI requires Sterling’s capital adequacy to rise from round 7% to fifteen% by June 2028. With the three-year extension, the group will both look to pare liabilities or meet the regulatory capital requirement inside the timeline by investing extra capital,” mentioned an individual aware of the matter.Each RBI and SP group didn’t reply to a request for remark.

The group needed to safe RBI’s exemption inside 4 months of the bond issuance. Failure to take action would have constituted a technical default, based on the deal phrases. The aid ensures SP Group meets this key situation.

The transaction implies a loan-to-value (LTV) ratio of approx 14.7%, primarily based on the collateral pool disclosed to buyers. Aside from the Tata Sons stake, the group additionally pledged shares of actual property arm SPRE as a part of the security bundle.