Banks put heat on ‘loan defaulting’ men of steel
State Bank of India, the lead lender in most consortiums and one of the most affected from the large corporate defaults seen recently, on Wednesday summoned the promoters of top steel companies.business Updated: Mar 17, 2016 01:20 IST
State Bank of India, the lead lender in most consortiums and one of the most affected from the large corporate defaults seen recently, on Wednesday summoned the promoters of top steel companies, including Jindal Steel & Power Ltd (JSPL), Bhushan Steel, Essar Steel, Visa Steel and Adhunik Metals to Mumbai, to conduct a rare review of loan repayments and explore possible options of bringing in strategic investors.
The review, under the aegis of the joint lenders’ forum (JLF), was described as “unprecedented” by one of the promoters who attended the meeting. It comes in the wake of the furore over the default by Kingfisher Airlines and promoter Vijay Mallya, who left for the UK even as the CBI and the Enforcement Directorate initiated investigations into possible fraud.
The meetings are in line with the strategic debt restructuring being done by banks and encouraged by the Reserve Bank of India (RBI), which has set the deadline of March 2017 for banks to clean their books of bad loans.
“Such meetings have happened in the past, too, but this time the urgency with which the meetings were convened and the frequency has not been seen before...meetings being scheduled one after the other and spread over 2-3 days,” said the promoter. “This time the banks are stressing on one thing - bring in an investor. This is not the way lenders should be interacting,” he added.
“This was a review of the stressed assets of the top 50 accounts. It was an opportunity to bring them to the table and find ways to resolve the large debt and look at options of recovering the money,” said the head of one of the banks.
Bank of India will conduct an individual review on March 17.
A previous Financial Stability report by the RBI had said that five out of the top 10 private steel companies are under severe stress.
Steel, a key alloy used for making cars and consumer goods and in building houses, has seen a major drop in demand after China, the world’s largest consumer and producer of the material, hit a major slowdown.
First Published: Mar 17, 2016 00:06 IST