NEW DELHI has decided to sell its loans in Essar Steel as it could see a spurt in provisioning for bad loans and erosion in capital base if the steel maker‘s insolvency process gets delayed further, sources said.
The ‘s decision, however, will not stall the Insolvency and Bankruptcy Code () process as the new entity will join the committee of creditors, they clarified.
SBI, which is the largest creditor having total exposure of Rs 15,431.44 crore in Essar Steel, has invited expression of interest (EoI) from banks, asset reconstruction companies, and financial institutions for the proposed sale of its debt.
The lender has put the reserve price for the recovery of bad loans from Essar Steel India at Rs 9,587.64 crore, according to the EoI.
Although the matter is before the National company law tribunal Ahmedabad bench, the delay in the process of resolution was the main reason for SBI opting for sale of its debt outside the IBC process.
The delay in resolution will hurt the balance sheet of the SBI, sources said, adding if the case is not settled during this quarter the bank will witness erosion in capital base as it will have to fully provide for, sources said.
Source: Economic Times,March 17,2019