Peninsula Land Ltd, an Indian property developer, blamed overdue rent from prime minister Narendra Modi’s government for missing a 23.5 million rupees ($330,000) debt payment.
It couldn’t pay State Bank of India (SBI) on time because India’s tax departments, which had leased office space from Peninsula, were delaying rent payments, the company said in a filing.
The loan used rent receipts as collateral, a facility where the rent often goes straight to the bank rather than to the property owner, it said.
Peninsula used its own resources to pay the loan and “regularised” the account, the company said, in a bid to ease concerns among investors grappling with a credit crisis that’s hit some property developers hard. India’s government is poised to miss its fiscal revenue-collection targets and exceed its budget deficit goal as Asia’s third-largest economy founders.
“Lately, there have been delays in the payment of rent by the government of India which, in turn, resulted in delay in payment to SBI on the due date,” Peninsula said. The company paid about 2.65 billion rupees of its debt and interest obligations last month and “there is no question of defaulting for an amount as small as 23.5 million rupees,” it said.
A spokeswoman for the tax office didn’t reply to a text message seeking comment outside of business hours in India. Peninsula’s shares plunged 6.2% on January 2, the most since November 14, after it said that it had missed the payment. The company hadn’t disclosed details in the filing that day.