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Cong hits out at SBI for ‘buying’ equity in SIIL
Such an arrangement creates a dangerous precedent in India’s corporate debt landscape, said Congress leader Jairam Ramesh
The Congress on Tuesday expressed concerns over a purported decision of the State Bank of India (SBI) to convert its outstanding debt into equity in Supreme Infrastructure India Limited (SIIL) and sought the Reserve Bank of India (RBI)’s intervention in the matter.
In a post on X, Congress general secretary in-charge communications Jairam Ramesh shared a media report which claimed that SBI will take a dual role in the debt restructuring of defaulter SIIL, by transitioning from being the firm’s primary creditor to becoming an equity stakeholder.
“In an extraordinary move, the SBI has decided to convert its outstanding debt into equity in Supreme Infrastructure India Limited (SIIL), a firm that declared bankruptcy. The lendors, including SBI, took a 93.45% haircut on the debt,” he said in the post in Hindi.
Such an arrangement creates a dangerous precedent in India’s corporate debt landscape, Ramesh said, adding that it encourages other defaulting companies to seek similar deals, where they can retain control and value even after significant defaults. “It raises questions about the effectiveness of India’s insolvency resolution framework and the role of public sector banks in managing distressed assets,” he said.
The SBI appears to be aligning itself with the interests of the defaulting borrower (SIIL) rather than prioritising the recovery of public funds, Ramesh said. “The Reserve Bank of India (RBI) needs to step in and examine SBI’s decision-making process in this matter,” he added.
