India cbank asks banks for Satyam exposure
India's central bank is checking local banks exposure to firms run by the founding family of fraud hit Satyam Computer Services.india Updated: Jan 13, 2009 12:45 IST
India's central bank is checking local banks exposure to firms run by the founding family of fraud hit Satyam Computer Services, with banking sources saying the focus was on property related loans.
A central bank spokeswoman said the Reserve Bank has sought details of banks exposure to Satyam and its group companies.
The Reserve Bank of India has asked all banks to detail their fund and non fund exposure to Satyam and Maytas firms, said three sources, who spoke on condition of anonymity, adding the exercise should conclude over the next few days.
Last week, Satyam founder and chairman Ramalinga Raju resigned, revealing inflated earnings and fictitious assets at the country's fourth largest software services exporter.
The sources said the outsourcing firm had limited outstanding debt to banks, but there were concerns over exposure to Maytas companies, which have interests in property and are controlled by the Raju family.
Maytas Satyam spelt backwards companies include Maytas Properties and Maytas Infra.
Maytas Infra shares have tumbled 72 per cent since Dec 16, when Satyam announced plans to buy it and Maytas Properties for $1.6 billion cash before abandoning the plan under shareholder pressure.
The sources said bank loans to Maytas firms were mostly secured against property and office space.
On Monday, the chairman of State Bank of India, India's top lender, said it had about 5 billion rupee ($103 million) exposure to Maytas firms', but nothing to Satyam.
Second ranked lender ICICI Bank said in a statement it was reviewing its Maytas exposure, without giving details.
SBI, along with ICICI, Axis Bank, HDFC Bank and Punjab National Bank are among 12 lenders to Maytas Infra, the company's 2007/08 annual report showed.
The firm had secured and unsecured loans worth 9.36 billion rupees ($191 million) as at March 2008, the report showed, but two of the sources said the debt had risen over the last nine months as Maytas aggressively bid for and won large contracts.
In August, a consortium including Maytas won a 120 billion rupee contract to build India's biggest metro rail network in Hyderabad, where Satyam is based.