RBI sends list of 12 accounts for bankruptcy proceedings

UNDER PRESSURE Govt banks need more capital than budgeted, says Mundra

The Reserve Bank of India has sent the list of 12 accounts its internal advisory committee has shortlisted for invoking immediate bankruptcy proceedings, said five bankers aware of the development. They didn’t wish to be quoted since the information wasn’t public.

In the letter, the central bank said that these cases should be filed under the insolvency and bankruptcy code (IBC) at the National Company Law Tribunal (NCLT) within the next one month, these bankers said.

The defaulters list includes Bhushan Steel Ltd, Bhushan Power & Steel Ltd, Essar Steel Ltd, Jaypee Infratech Ltd, Lanco Infratech Ltd, Monnet Ispat & Energy Ltd, Jyoti Structures Ltd, Electrosteel Steels Ltd, Amtek Auto Ltd, Era Infrastructure Ltd, Alok Industries Ltd and ABG Shipyard Ltd.

Essar Steel and ABG Shipyard declined to comment. Officials from Bhushan Power & Steel and Alok Industries said they hadn’t hear d from lenders. Officials from Amtek Auto, Era Infra, Jyoti Structures and Electrosteel couldn’t be reached. Other firms didn’t respond to emails or messages seeking comment.

“We may not comment since this is a client specific matter,” said an IDBI spokesperson. Other lead banks didn’t respond.

State Bank of India, which is the lead banker in six accounts, has scheduled a joint lenders’ forum to chart out a plan for trying these companies at the NCLT, according to two of the five bankers cited earlier.

“We will try to plug all the loopholes in the accounts in the coming JLF (joint lender forum)meetings to avoid delay in proceedings,” said one of the bankers cited earlier.

The central bank has initiated this process under the powers given it by a May 5 ordinance which amended the Banking Regulation Act to resolve the ₹10 lakh crore stressed assets pile.

On Tuesday, RBI had said that accounts with outstanding amounts of more than ₹5,000 crore, of which at least 60% was classified as non-performing by banks as of March 31, 2016, can be referred for bankruptcy.

Under the IBC, once a case is admitted by the NCLT, a resolution plan must be in place within 180 days of admission. This is extendable up to 90 days. In case there is no plan or the committee does not agree on one, the company will go into liquidation.

Separately, RBI deputy governor SS Mundra said on Friday that there are no plans to come out with another list any time soon as they have already released the list of 12 defaulters and also have asked banks to finalise a resolution plan for other accounts within the next six months.

However, bankers worry that they will have to take a large haircut to resolve the bad asset and also make higher provisioning once bankruptcy proceedings start. RBI had said on Tuesday that it would detail revised provisioning norms for cases accepted under the bankruptcy code. Many smaller banks are expecting some relief in the provisioning, either in the amount or on spreading the amount over a few quarters.

For a lasting solution however, the government will have to infuse capital into state-owned banks. Mundra also added that public sector banks will require more capital beyond the budgeted total allocation of ₹70,000 crore in the four fiscal years through March 2019.

“With this, we can expect promoters proactively coming forward to finding a solution. However we do not expect any material resolution before FY19,” said Saswata Guha, director, Fitch Ratings. Promoter Lead Bank Bhushan Steel Neeraj Singal

State Bank of India

FY16: 38,529.26 (R cr) FY17: 42,355.53

Bhushan Power & Steel Sanjay Singal

Punjab National Bank

FY16: 35,684 (R cr) FY17: NA

Essar Steel

Prashant Ruia State Bank of India

FY16: 31,211 (R cr) FY17: NA

Electrosteel Steels Umang Kejriwal State Bank of India

FY16: 8,807.85 (R cr) FY17: 7,505.08

Monnet Ispat & Energy Sandeep Jajodia

State Bank of India

FY16: 11,323.22 (R cr) FY17: 10,333.33 Alok Industries Ashok B Jiwrajka, Dilip B Jiwrajka, Surendra B Jiwrajka State Bank of India

FY16: 19,887.08 (R cr) FY17: 23,443.04 (FY17) (FY17) (FY17) (FY17) (FY17) (FY17)

FY16: 3,801.97 (R cr) FY17: 3,387.25

Jaypee Infratech Manoj Gaur IDBI Bank

FY16: 6,768.79 (R cr) FY17: 8,606.35 (FY17) (FY17) Lanco Infratech

Madhusudan Rao Lagadapati, Bhaskara Rao Garlapati

IDBI Bank

FY16: 41,843.47 (R cr) FY17: 43,501.75

(FY17)

ABG Shipyard

Rishi Agarwal and Kamlesh Kumar Agarwal ICICI Bank

FY16: 6,611.81 (R cr) FY17: 8,741.59

Amtek Auto

Arvind Dham Corporation Bank

Era Infra Engineering Hem Singh Bharana Union Bank

FY16: 9,341.24 (R cr) FY17: 10,129.02

(FY17) (FY17)