Encouraging sign

Dev Chatterjee and Abhijit Lele’s report, “Banks seek more clarity on RCom’s debt recast plan” (November 1) is an encouraging sign that banks are becoming careful about making deals. Banks should realise that the loan they are writing off comes from public funds, that is, shareholders. From the sketchy details available in the public domain, it seems banks will get 51 per cent equity for Rs 7,000 crore of debt, effectively giving a company a Rs 14,000-crore equity valuation. 

It is impossible to judge the fairness of such a valuation without having access to forecasts. Considering the current market cap of