If banks and financial institutions have their way, India Inc is set to witness a spate of hostile takeovers.
Banks and FIs, which hold substantial chunks of equities in companies across the country, are collectively wooing stronger corporations to take over the chronic defaulters' outfits, with the active cooperation of the lenders.
"We are approaching them with concrete proposals. In most of these defaulting companies, banks and FIs hold a substantial portion of the equities. We will ensure that the raiders do not have any problem in taking over these companies," said a senior executive of a large bank. However, the response so far has "not very encouraging".
"They are looking at the targets but still not very confident of taking the plunge since they do not want to get into any problem at a later stage. But we are ensuring all help," said the executive.
Banks and FIs have, in fact, drawn up a list of companies that can be targeted by potential raiders.
This is the second prong of the strategy that the lenders have adopted to "teach the chronic defaulters a lesson".
The first prong of the strategy is the sale of assets by enforcing the securitisation law.
"We are simultaneously looking at solutions from both sides: sale of assets as well as equities. In the case of a sale of assets, the promoters are unlikely to get anything while if they agree to sell equities, they may get something," said another senior banker involved in the process.
Though the promoters are demanding "good prices", banks and FIs are trying to make them see reason and settle for "realistic" prices.
Under the new securitisation law (passed by Parliament), if 75 per cent of the secured lenders agree, the assets of a defaulter can be sold after giving a 60-day notice to the borrowers.
Since the liabilities of the secured creditors are required to be met first, the unsecured creditors (like the fixed deposit holders) as well as the promoters will not get anything from the assets sale.
"We are merely selling the assets and not the company. Hence, the question of promoters' getting money does not arise," pointed out an institutional executive.
Banks and FIs have collectively served over 10,000 notices so far to defaulting borrowers.
They are trying to create a market for the assets of the defaulters and wooing multinational corporations and local companies to buy these assets.
© 2026