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NPAs: Banks to get back over Rs 1 lakh crore

Enthused by successful conclusion of Bhushan Steel case, the Finance Ministry expects banks to write back more than Rs 1 lakh crore after the resolution of all 12 NPA cases referred to insolvency proceedings by the RBI in its first list.

NPAs: Banks to get back over Rs 1 lakh crore
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Last week, Tata Group acquired controlling stake of 72.65 percent in the debt-ridden Bhushan Steel Ltd for around Rs 36,000 crore. This will help in cleansing the banking system as well as boost lenders profitability. 

The remaining 11 NPA cases which are in the pipeline will easily bring to the table over Rs 1 lakh crore and the amount coming from resolution under the Insolvency and Bankruptcy Code (IBC) will directly add to the bottom line and help in reduction of NPAs of the public sector banks, a senior Finance Ministry official said. 

Last year in June, RBI’s internal advisory committee (IAC) identified 12 accounts, each having more than Rs 5,000 crore of outstanding loans and accounting for 25 per cent of total NPAs of banks. 

Following the RBI’s advisory, banks referred Bhushan Steel Ltd, Bhushan Power & Steel Ltd, Essar Steel Ltd, Jaypee Infratech Ltd, Lanco Infratech Ltd, Monnet Ispat & Energy Ltd, Jyoti Structures Ltd, Electrosteel Steels Ltd, Amtek Auto Ltd, Era Infra Engineering Ltd, Alok Industries Ltd and ABG Shipyard Ltd to NCLT. 

These accounts together have total outstanding loan of Rs 1.75 lakh crore.  The Kolkata Bench of the National Company Law Tribunal (NCLT) has already approved Vedanta Resources’ resolution plan for acquisition of Electrosteel Steels last month. 

Besides, the NCLT last month also asked the lenders of Bhushan Power & Steel to consider the bid submitted by UK-based Liberty House for the debt-ridden company.  

Bhushan Power and Steel owes close to Rs 48,000 crore to banks and was referred to the NCLT by Punjab National Bank in June last year. State-run Punjab National Bank (PNB) saw wilful defaults by big borrowers slipping further to Rs 15,199.57 cr in April this year over the previous month, soon after suffering a record loss of more than Rs 13,400 cr for January-March due to frauds and bad loans. 

The bank which posted a record loss of more than Rs 13,400 cr for the last quarter of 2017-18 closed the fiscal with big wilful defaults of Rs 15,171.91 cr, according to the PNB data. Big wilful defaulters are categorised by PNB as those borrowers with loan outstanding of Rs 25 lakh and over.

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