While the bank has 188 derivatives transactions with an aggregate mark-to-market loss (MTM) of Rs 673.55 crore at the end of March 2008, there are six transactions where companies are not unwilling to honour the contract. Of the 188 deals, 113 are outstanding transactions dealing in foreign exchange derivatives where the aggregate MTM loss is Rs 547.72 crore.
While a host of banks, a majority of which are new generation private players, have sold derivatives products, Axis Bank is the first to disclose the details of such transactions, some of which involved cross-currency options and swaps.
The private sector bank did not disclose the identity of the two companies that have gone to court, but it is widely known that they are Rajshree Sugars & Chemicals and Nahar Industries. The bank pointed out that the outstanding contracts have not turned non-performing assets and involve mark-to-market losses.
The Reserve Bank of India guidelines requires banks to treat assets as NPAs 90 days after default.