SBI puts loan exposure to Essar Steel on the block: The resolution plan of Arcelor-Mittal approved for Essar Steel was approved by the Creditors’ Committee, if it had been implemented, SBI had received 11,313 crores. SBI, however, has kept the minimum reserve priceless for selling the loan.
Kolkata / Mumbai – SBI puts loan exposure to Essar Steel on the block
State Bank of India (SBI) has decided to sell the entire debt of Rs 15,431 crore given to Essar Steel. He has decided that he will take at least Rs 9588 crore from the buyer of a loan. That is, SBI is willing to give more than one-third of the total debt to the market. Although this decision also shows that he wants to get his money back as soon as possible. For outstanding loans on Essar Steel, asset reconstruction companies, non-banking finance companies, other banks, and financial institutions can bid for this loan.
The resolution plan of Arcelor-Mittal approved for Essar Steel was approved by the Creditors’ Committee, if it had been implemented, SBI had received 11,313 crores. SBI, however, has kept the minimum reserve priceless for selling the loan.
SBI’s decision to drop more than one-third of the outstanding amount is telling that it does not seem to have settled the issue of debt on Essar Steel soon. Under the BankerPixie Resolution Framework, about 70 percent of the cases brought in the National Company Law-Tribunal (NCLT) has not been settled on fixed deadlines according to the revised regulations of the insolvency.
“We have waited a lot for the resolution,” A senior SBI official said. There is a limit to waiting. “Essar Steel’s sales are not going to be completed soon because it can be challenged after the NCLT order in NCLAT and then it can be challenged in the Supreme Court,” he said. We hope Bayer will get it, which will give us about 85 percent of that value which can be achieved in another way. This amount will be more than our provisioning for this loan.
SBI puts loan exposure to Essar Steel on the block | Indiatimelines New
Essar Steel case has been running for more than 500 days. Under the Insolvency and Bankerpace Code, the maximum of 270 days is fixed for the disposal of any case. In the second quarter, SBI’s net profit fell 40 percent to Rs 945 crore from a year ago. This happened despite some improvement in asset quality.
In a notice on SBI’s Auction website, it was stated that reserve price was fixed with an 18 percent discount, keeping a one-year time factor in mind based on the net present value of the minimum recovery. The bank has also mentioned a clack option and said that if the resolution process is completed within a year, then the buyers should be prepared to pay more than the reserve price.