Mumbai, Jan 16 (IANS) In a surprise move, State Bank of India (SBI) on Wednesday put its entire loan exposure of Rs 15,431.44 crore in bankrupt Essar Steel on sale even though the prolonged insolvency case had neared resolution last October.
The bank, as per a notice on its auction website, said it plans to sell the account to asset reconstruction companies (ARCs), banks, non-banking financial companies (NBFCs) or financial institutions (FIs).
It has set the minimum reserve price for the loan at Rs 9,587.64 crore. The price is set on the basis of the net present value (NPV) of the minimum recovery discounted at 18 per cent with a time factor of one year.
And, the minimum recovery to SBI as per the approved resolution plan of ArcelorMittal subsidiary ArcelorMittal India Private Ltd (AMIPL) is Rs 11,313.42 crore.
ArcelorMittal's proposal of Rs 42,000 crore to the lenders and additional Rs 8,000 crore towards capital expenditure in Essar Steel was approved by the Committee of Creditors (CoC) to Essar Steel on October 25, 2018.
However, a group of creditors including the promoters of Essar Steel have challenged the decision of the CoC. Earlier this month, the National Company Law Appellate Tribunal (NCLAT) ordered its Ahmedabad bench to expedite the resolution process.
The CoC, led by SBI, has also filed an application at NCLAT requesting for a speedier disposal of the case within the next three weeks.
Essar Steel was admitted for insolvency proceedings in August 2017 and the resolution has taken more than 500 days instead of the mandatory 270 days.
The notice put out by the country's largest lender, however, has asked for a claw-back option from the buyer if the amount is realised prior to one year.
About Gopi
Gopi Adusumilli is a Programmer. He is the editor of SocialNews.XYZ and President of AGK Fire Inc.
He enjoys designing websites, developing mobile applications and publishing news articles on current events from various authenticated news sources.
When it comes to writing he likes to write about current world politics and Indian Movies. His future plans include developing SocialNews.XYZ into a News website that has no bias or judgment towards any.
He can be reached at gopi@socialnews.xyz