Banks act against Future Retail for missing payments

Lenders to Future Retail have started classifying loans to the firm as a ‘non-performing asset’ after the retailer missed payments to the banks, they told the Supreme Court in a filing.

The lenders also said they would be required to provision ₹80-90 billion in their books on account of the default by the retailer.

“Lenders have already classified/begun classifying the loan account of FRL as a non-performing asset (NPA) since the payment was not made within” the stipulated time, they said in the filing.

FRL declined comment.

Being classified as an NPA will raise financial troubles for FRL, which has for months tried to sell its retail assets to rival Reliance Industries, but failed to do so because of legal challenges from its partner Amazon.

Citing its dispute with Amazon, FRL last month challenged its lenders in the top court to avoid facing insolvency proceedings or being classified as a defaulter, after it missed making certain payments on its loans.

Future has failed to complete its $3.4 billion retail assetsale as Amazon has successfully argued before legal forums thatthe Indian retail giant violated certain non-compete contractualterms the two sides had. Future denies any wrongdoing.

Future has told Indian stock exchanges it was unable to pay35 billion rupees ($470 million) it owed to its lenders on Dec.31 as it could not sell certain small stores amid the row withAmazon. It had hoped to use a 30-day grace period to resolve thesituation, but was not able to do so.