Bank loan defaults: Yogi government checking debt profile of investors

Uttar Pradesh had signed over 1,000 MoUs worth Rs 4.68 trillion during Investors Summit

In the backdrop of alleged bank loan defaults and frauds by private companies making big headlines, the Yogi Adityanath government is checking the debt profile of companies who had proposed investments during the recent Uttar Pradesh Investors Summit 2018.

The Adityanath government had signed over 1,000 memorandum of understandings (MoUs) worth about Rs 4.68 trillion during the two-day summit held on 21-22 February. Now, the state government is conducting due diligence with each MoU to ensure that only financially sound and serious contenders are in the fray so that investments fructify within a stipulated timeframe.

Uttar Pradesh Infrastructure and Industrial Development Commissioner (IIDC) Anup Chandra Pandey has directed nodal officers to analyse each MoU pertaining to their respective departments for the debt profile, financial standing, turnover and business verticals of each investor, and forward their recommendations by Friday.

The government has identified nine priority sectors to speed up the proposed investments. These sectors are housing, urban development, horticulture and food processing, information technology and electronics, energy, solar energy, industrial development, tourism and information.

The MoUs would also be tabulated district-wise to involve the respective district magistrates to further top gear their progress on the ground. The processes related to land, water supply, power, apart from the sops promised by the state, have been put on the priority of investment proposals.

The biggest takeaway of the Investors Summit was the announcement of defence manufacturing cluster in Bundelkhand, which is projected to attract direct investment of about Rs 200 billion and generation of 3.3 million job opportunities. The cluster would span several districts in its catchment, including Aligarh, Agra, Jhansi, Kanpur, Lucknow and Chitrakoot.

The Centre has pitched UP for substituting the country’s arms import bill. India is the world’s largest military hardware importer and among the top five military spenders. Between 2012 and 2016, India accounted for about 13 per cent of the global arms imports. India is projected to incur $250 billion on defence procurement over the next decade.

Last month, the Bank Securities and Fraud Cell of Central Bureau of Investigation (CBI) had arrested Kanpur-based industrialist and promoter of Rotomac Vikram Kothari and his son Rahul for allegedly cheating a consortium of banks of Rs 37 billion. His several movable and immovable properties and bank accounts in Delhi and Kanpur were later attached by different central agencies even as the probe is on.

Another Kanpur-based company Shri Lakshmi Cotsyn Limited has also been in the news recently over its failure to repay bank loans of over Rs 39 billion borrowed from a consortium of 16 banks led by Central bank of India and comprising Syndicate Bank, Union Bank, Canara Bank, Bank of Baroda, Punjab National Bank, Indian Bank, State Bank of India, Exim Bank, Oriental Bank of Commerce, IDBI Bank, Vijaya Bank, Corporation Bank, Saraswat Bank and Andhra Bank.