Bhushan, Essar Steel among 12 firms being moved to insolvency courts - sources | Reuters

By Devidutta Tripathy

MUMBAI The Reserve Bank of India (RBI) has asked lenders to initiate bankruptcy proceedings against a dozen companies, including Essar Steel, Bhushan Steel Ltd, Monnet Ispat and Energy Ltd, sources with direct knowledge of the matter said.This follows a change enacted in laws last month that gives the Reserve Bank of India greater power to address the $150 billion stressed loan problem plaguing growth in Asia's third-largest economy. This week, the RBI said it had identified 12 of the country's biggest loan defaulters.Jaypee Infratech, Electrosteel Steels, unlisted Bhushan Power & Steel, textiles maker Alok Industries, ABG Shipyard and Jyoti Structures are also among the firms that will be taken to insolvency courts by the RBI, said the sources, who asked not to be named as the list was not public.The RBI has yet to officially name any of the 12 companies, which account for about 2 trillion rupees ($31 billion) of India's non-performing loans, or roughly 25 percent of all the country's bad loans.CNBC TV18, which reported the 12 names earlier on Friday, also said Lanco Infratech, Amtek Auto and Era Infra Engineering were on the list. Reuters could not immediately verify these three names.

According to the television station, RBI has asked banks to initiate bankruptcy proceedings against six of the firms within 15 days and to file petitions for the others within 30 days.The RBI had no official comment.A spokesman for Essar Steel declined to comment, while a spokesman for Electrosteel said they had heard from their main lender that creditors wanted to initiate resolution of the unpaid loans through the National Company Law Tribunal.

The NCLT has been appointed as the nodal court for insolvency and bankruptcy proceedings in India. A bankruptcy filing would result in recovering some funds owed through a debt restructuring, or ultimately through liquidation of the company. Such action means banks would no longer leave bad debt on their books and it could force them to put more money aside to cover losses - at a time when funds are already short as banks seek to comply with international capital standards.

The filings could have far reaching implications, as India's new insolvency code sets out a tight deadline for restructuring resolutions to be struck, failing which the defaulters would be moved into forced liquidation, potentially leading to further value erosion and jeopardizing tens of thousands of jobs at the heavy industry companies on the list.Indian banks typically lend larger sums in groups. Lead banks plan to call meetings of the groups over the next two weeks to decide the next course of action, one source said. Jaypee Infratech, Lanco, Bhushan Steel, Monnet, Bhushan Power & Steel, Jyoti, Era, Amtek, Alok and ABG were not immediately reachable for comments. ($1 = 64.4400 Indian rupees) (Reporting by Devidutta Tripathy; Editing by Euan Rocha and Himani Sarkar)

This story has not been edited by Firstpost staff and is generated by auto-feed.

Updated Date: Jun 16, 2017 21:48 PM

Also Watch

Watch: The true stories from Dharavi that inspired Rajinikanth's Kaala
  • Thursday, March 8, 2018 Watch: Cyrus Khan talks about Parkour, jumping across walls and why he hates sitting
  • Thursday, May 31, 2018 Unwind: India's basketball sensation Amjyot Singh has his eyes set on becoming an NBA regular
  • Monday, May 28, 2018 First Day First Showsha — Review of Solo: A Star Wars Story in 10 questions
  • Saturday, May 19, 2018 Social Media Star: Rajkummar Rao and Bhuvan Bam open up about selfie culture, online trolls

Also See