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The country’s lender, State Bank of India (SBI), and other commercial banks have a combined exposure of Rs. 40,000 crore to the controversy-ridden Bhushan Steel. The banks are in talks to appoint a management agency to monitor the operations of the company.
The Central Bureau of Investigation (CBI) has arrested former Syndicate Bank CMD SK Jain after he allegedly demanded Rs. 50 lakh from Bhushan Steel in exchange for providing extensions on loans worth Rs. 100 crore to the company, which had defaulted on payments.
“We are in discussions with other banks including PNB (Punjab National Bank), which is the consortium leader,” said Arundhati Bhattacharya, chairperson, SBI. “This (management) agency will monitor the company on a daily basis.”
Several loans that were placed with Syndicate Bank are under investigation with a number of them allegedly reporting irregular repayment schedules within months of being sanctioned.
Jain’s influence and role in approving loans to borrowers who do not deserve it in exchange of a quid pro quo is being investigated. Besides, his role in approving loans at a price lower than what it should have been is also under scanner.
There are 35-50 banks in the consortium, including PNB, ICICI Bank and IDBI. PNB is the lead banker for term loans to Bhushan, while SBI heads the consortium for working capital loans.
SBI has called a meeting of the lenders’ consortium next week to discuss the proposal, she said.