The lenders recently failed to arrive at a consensus on restructuring the company’s debts. “We’re not sure if the collateral pledged with the lending banks covers the entire loan amount,” said a very senior executive at one of the lending banks on condition of anonymity.
The Reserve Bank of India (RBI) is likely to ask the lending banks to provide all details of the loan portfolio, a senior RBI official said. “We may also ask banks to check whether they followed due diligence norms prescribed by RBI.” However, no final decision has been taken in the matter.
“It is a worrisome situation and could turn out to be a big blow for the banking industry,” a senior executive at private sector bank added also on condition of anonymity.
The corporate affairs ministry is also likely to order an investigation into the company’s books of accounts to see if there have been irregularities in their audits, a senior government official said.
Sources added that the auditors of the company could also be pulled up. When contacted, Subodh Kumar Agrawal, president, Institute of Chartered Accountants of India, refused to comment on the issue.