Kesar Enterprises, a Mumbai-based company, announced on March 30 that its board of directors had accepted a one-time settlement (OTS) sanctioned by UCO Bank, following discussions between the two parties regarding the classification of the company’s loan accounts as non-performing assets (NPAs).

The bank had classified the loan accounts as NPAs due to the company’s non-payment of dues and financial problems. The company said that the total liability towards its direct debt liability and liability arising out of the invocation of corporate guarantee extended by the company would be settled as a result of the one-time settlement being sanctioned by the bank and accepted by the board.

The settlement requires that Kesar Enterprises complete the payments within the timeframe provided in the sanction letter issued by the bank. All security interest or guarantee under all financing documents will be released, and the bank will issue a no-due certificate upon receipt of the entire one-time settlement amount. Kesar Enterprises has agreed to pay approximately Rs 120.9 crore for the settlement.

As part of a previous debt restructuring plan, the company had agreed to pay Rs 1.7 crore plus Rs 42.17 lakh in 24 instalments, beginning from the quarter ending September 2016 to June 2022, according to the company’s March 2022 annual report.

The share price of Kesar Enterprises rose 19.99% to Rs 66.86 on March 31, a day after the board approved the one-time settlement with UCO Bank. The share had reached a 52-week high of Rs 122.35 on April 22, 2022, and a 52-week low of Rs 50 on February 28, 2023, and was trading 45.35% below its 52-week high and 33.72% above its 52-week low.

Kesar Enterprises’ announcement comes after the Reserve Bank of India (RBI) announced new measures to reduce the amount of bad debt on the books of Indian banks. The RBI’s measures included a resolution framework for NPAs, which would allow for a more timely and effective resolution of NPAs, and a strengthened monitoring mechanism for banks’ compliance with the framework.

The RBI’s measures aim to improve the overall health of the banking system in India, which has been struggling with high levels of bad debt in recent years. The measures are expected to help banks reduce their non-performing assets and improve their profitability, which should, in turn, help to support economic growth in the country.