The inability of promoters to bring in fresh equity could significantly hamper loan restructuring of companies hit by a sharp fall in revenues due to the extended lockdown.
While the government and the Reserve Bank of India (RBI) have announced several measures to aid liquidity flow into stressed companies, two bankers said on condition of anonymity that the increasingly lopsided debt-equity ratio of many companies could be a major hurdle for any potential loan recast, which could threaten the survival of many companies.
In the past, many Indian promoters have heavily relied on lenders, including banks and credit funds, to raise equity for their business.