The Reserve Bank has granted the Shapoorji Pallonji Group a three-year extension until June 2028 to meet increased capital adequacy norms for its investment company, Sterling Investment Corp. (SICPL), people familiar with the matter told ET.
The regulatory relief comes after the RBI revised a scale-based framework for non-bank lenders. The relief is a key covenant of the group’s recent $3.4 billion (₹28,500 crore) bond issuance, which carries a steep yield of 19.75 per cent and was subscribed to by private credit funds including Farallon Capital, Cerberus Capital and Davidson Kempner.
The zero-coupon rupee bonds are backed by SP Group’s 18.37 per cent stake in Tata Sons and shares of its real estate arm, Shapoorji Pallonji Real Estate (SPRE), valued at $3.2 billion. The structure, one of the largest such private placements by an Indian group, had regulatory latitude as a precondition.
The SP Group had sought the dispensation while issuing the high-yield bonds in May.
SICPL, an RBI-registered NBFC holding a 9.18 per cent stake in Tata Sons, was recently reclassified as a mid-layer NBFC, triggering stricter capital norms.
Under the new rules, it must maintain a capital adequacy ratio of at least 15 per cent of risk-weighted assets. Currently, the NBFC has a ratio of just 7 per cent with total capital of around ₹1,000 crore. It now needs to more than double this to ₹2,100 crore within the next three years.
“RBI requires Sterling’s capital adequacy to rise from around 7 per cent to 15 per cent by June 2028. With the three-year extension, the group will either look to pare liabilities or meet the regulatory capital requirement within the timeline by investing additional capital,” said a person familiar with the matter.
Both RBI and SP group did not respond to a request for comment.
The group had to secure RBI’s exemption within four months of the bond issuance. Failure to do so would have constituted a technical default, according to the deal terms. The relief ensures SP Group meets this key condition.
The transaction implies a loan-to-value (LTV) ratio of approx 14.7 per cent, based on the collateral pool disclosed to investors. Apart from the Tata Sons stake, the group also pledged shares of real estate arm SPRE as part of the security package.
