Yes Bank has issued a notice of possession for Anil Ambani’s Reliance Group headquarters at Santacruz & 2 other offices in south Mumbai. In its notice, the bank said it was effecting recovery against a Rs 2,892-crore loan to Reliance Infrastructure. The bank’s action includes taking over two floors of office space in Nagin Mahal at Backbay under a law that allows it to sell assets of defaulters.
The headquarters was situated on a 21,432-square metre plot, which was a legacy of Reliance’s acquisition of BSES 2 decades ago. BSES was rechristened Reliance Energy & subsequently repositioned as Reliance Infrastructure, which currently owns the property.
The group shifted to the office at Santacruz in 2018. The building, off the Western Express Highway, overlooks Mumbai airport. Besides Reliance Infrastructure, it houses offices of Reliance’s financial services including Reliance Capital, Reliance Housing Finance, Reliance General Insurance & other group firms. In recent months as the group shrunk its operations, most of the offices were consolidated in the North Wing, & the property was listed for lease with JLL. Following the Covid-19 lockdown, most employees were asked to work from home & there was further consolidation of office space.
Yes Bank, which faced a crisis in March this year on account of bad debts, has substantial loans due from the Anil Ambani group, to which it had an exposure of close to Rs 12,000 crore.
In the last 2 decades, the Anil Ambani group expanded aggressively in new businesses raising high levels of debt. However, the businesses didn’t generate the cash flows required to repay the debt. Several of them also got mired in legal disputes which made debt resolution difficult.
The private bank said that it gave the company sixty days’ notice to repay the loan on May 5 under the Securitization & Reconstruction of Financial Assets & Enforcement of Security Interest (Sarfaesi) Act 2002. As the company had failed to make any repayment, the bank had taken possession under the Act. The legislation allows banks to take possession & sell assets belonging to loan defaulters without recourse to courts.