Business Standard

Bankers meet to decide on bad loan accounts

- PRESS TRUST OF INDIA Mumbai, 18 June

Beginning Monday, bankers will be meeting to finalise their next course of action on six of the 12 bad loan accounts for immediate referral to the National Company Law Tribunal (NCLT) after the RBI named the largest defaulters to face bankruptcy proceeding­s.

The first set of six troubled accounts are Bhushan Steel (~44,478 crore), Essar Steel (~37,284 crore), Bhusan Power and Steel (~37,248 crore), Alok Industries (~22,075 crore), Amtek Auto (~14,074 crore) and Monnet Ispat (~12,115 crore), a banker said.

According to the RBI, these 12 accounts owe ~2.5 lakh crore to the system, which constitute around 25 per cent of gross bad loans.

The other accounts named for bankruptcy action, according to bankers, include Lanco Infra (~44,364.6 crore), Electroste­el Steels (~10,273.6 crore), Era Infra (~10,065.4 crore) Jaypee Infratech (~9,635 crore) ABG Shipyard (~6,953 crore) and Jyoti Structures with a defaulted loan of ~5,165 crore.

Last week, the RBI’s internal advisory committee (IAC) had sent the list of 12 accounts to bankers for immediate reference under the Insolvency and Bankruptcy Code (IBC).

These 12 accounts are led by SBI (six of them), PNB, ICICI Bank, Union Bank, IDBI Bank and Corporatio­n Bank, according to bankers.

“Beginning Monday, banks are meeting to discuss six of the 12 accounts named by the RBI before referring accounts to the NCLT by the end of this month,” a banker said.

Since these are large accounts and involve multiple banks, the lenders will try to take a common view on all administra­tive requiremen­ts before referring these Ispat and Energy did not respond to e-mails sent to them, Era Infra and Lanco Infra could not be contacted. When reached out for comment, Essar Steel spokespers­on said, “We are not aware of any such developmen­t.” These 12 accounts referred by the RBI have an exposure of more than ~5,000 crore each, with 60 per cent or more classified as bad loans by banks as of March 2016. Once a case is referred to the NCLT, there is a time line of 180 days to decide on a resolution plan. An additional 90 days can also be given. If a plan is not decided, then the company will go into liquidatio­n. Total NPAs of the banking system stand at over ~8 lakh crore of which ~6 lakh crore are with public sector banks. Last month, the government had cleared an ordinance to amend the Banking Regulation Act, giving the RBI more powers to direct banks to resolve bad loans.

Since these are large accounts and involve multiple banks, the lenders will try to take a common view on all administra­tive requiremen­ts before referring these accounts to the NCLT

accounts to the NCLT.

Another banker said “they will also decide on appointmen­t of insolvency profession­al (IP) who will later decide on the resolution plan and submit it to the lenders for their considerat­ion”.

While ABG Shipyard, Amtek Auto, Alok Industries, Bhushan Steel, Bhushan Power and Steel, Electroste­el Steels, Jaypee Infratech, Jyoti Structures and Monnet

CYRIL SHROFF,

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