Bank of Baroda (BoB) has cut an unusual property deal with Kohinoor Mills, which owns a prized property in Mumbai. In a cashless transaction, the bank has acquired a slice of prime space at Kohinoor Mills aimed to settle the loan taken by the company that is owned by former Maharashtra Chief Minister Manohar Joshi. The agreement has a clause that BoB will have the option to sell it back to Kohinoor Mills three years later.
The unconventional transaction, which has raised eyebrows in banking circles, will help the bank avoid tagging the Rs 90 crore unrecovered loan as a non-performing loan. As far as Kohinoor is concerned, it would escape the defaulter tag and would be better positioned to borrow from other lenders to complete their project.
Kohinoor CTNL Infrastructure Company had acquired Kohinoor Mills in an auction in 2005 for Rs 421 crore. Close to 26 lakh sq ft can be constructed on the erstwhile mill.