SBI, other lenders tell promoters to reduce debt or face the music

By: | Published: March 14, 2016 11:59 PM

Led by State Bank of India (SBI), lenders have come down heavily upon promoters of stressed companies on Monday and asked them to either sell non-core assets or get external investors...

Officials from almost all banks huddled at SBI headquarters here along with promoters of stressed companies on Monday. (Express Photo)Officials from almost all banks huddled at SBI headquarters here along with promoters of stressed companies on Monday. (Express Photo)

Led by State Bank of India (SBI), lenders have come down heavily upon promoters of stressed companies on Monday and asked them to either sell non-core assets or get external investors as soon as possible to reduce debt, failing which banks will take coercive action, two people present at the meeting told FE. According to a public sector banker, promoters of Uttam Group, Adhunik Group among others attended the first phase of the three-day joint lenders forum (JLF), from Monday to Wednesday.

“These companies are in a difficult situation and although everyone is pointing fingers at the banks, there are external factors including political interference in the past that have led to such a stockpile of bad loans,” a banker said, asking not to be identified. He added that the meeting was aimed at organising a high-level JLF meeting. “Most bankers present at the meetings were general managers and above, thus giving the JLF more authority and decisiveness,” he added.

“The general advice was that promoters should find out ways to reduce debt and bring in some equity, sell non-core assets,” another banker said, adding that while Uttam Group is not a non-performing asset (NPA) and is able to service its debt, the promoters are looking to bring an investor and get equity without change of management.

Officials from almost all banks huddled at SBI headquarters here along with promoters of stressed companies on Monday. Sources said that promoters of Bhushan Steel and Visa Steel will be present on Tuesday and Wednesday.

This exercise is part of Reserve Bank of India’s (RBI) asset quality review (AQR) in which the central bank has asked banks to clean up their balance sheets by March 2017. It has given banks a list of some 150 accounts that had either become toxic or were in danger of getting there.

The total npas of the banking sector is currently Rs 4.43 lakh crore as at the end of December 2015; at the end of FY15 this was Rs 3.06 lakh crore.

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