SBI moves NCLT, files insolvency against Electrosteel

New Delhi: Consortium leader SBI has initiated insolvency proceedings before NCLT against Kolkata- based Electrosteel Steels to recover Rs 10,000 crore in loans as bankers tighten screws on big corporate defaulters.

The company said in a regulatory filing that State Bank of India has initiated the corporate insolvency resolution process and filed the documents with NCLT, Kolkata, against it under the Insolvency and Bankruptcy Code (IBC), 2016.

The action follows the meeting of lenders to the company on June 22 to work out resolution mechanism, it said.

For the fourth quarter ended March 31, 2017, Electrosteel Steels had reported a net loss of Rs 293.33 crore as against net profit Rs 265.14 crore in the year-ago quarter.

The lead banker to defaulters like Bhushan Steel and Essar Steel, SBI had said last week that the default cases would be referred to the NCLT for recovery under the IBC.

While Bhushan Steel is in default of Rs 44,478 crore to banks, Essar Steel owes Rs 37,284 crore. Electrosteel Steels owes Rs 10,273.6 crore.

These three borrowers are among the 12 accounts identified by the Reserve Bank for immediate reference to National Company Law Tribunal (NCLT).

The 12 accounts alone constitute a quarter of the over Rs 8 lakh crore of non-performing assets (NPAs) or bad loans. Of the total, Rs 6 lakh crore are with public sector banks.

Lanco Infratech has also said that RBI has directed its lead banker IDBI Bank to initiate insolvency procedure for the company.

Once a case is referred to NCLT, there is a 180-day time line to decide on a resolution plan though 90 days can be given in addition. If a plan is not decided, then the company will go into liquidation.

The internal advisory committee (IAC) of the RBI, after its meeting on June 13, had recommended 12 accounts totalling about 25 per cent of the gross NPAs of the banking system for immediate reference under Insolvency and Bankruptcy Code.

These accounts have an exposure of more than Rs 5,000 crore each, with 60 per cent or more classified as bad loans by banks as of March 2016.