IDBI Bank mulls action under bankruptcy code in 10 cases

Bank will use NCLT platform for medium sized enterprises where it has the maximum exposure

IDBI Bank is planning to drag over 10 corporate loan defaulters to the National Company Law Tribunal (NCLT) for recovery. 

The Mumbai-based public sector bank has received orders from the NCLT’s Ahmedabad Bench for appointment of interim resolution professionals in two cases relating to Bhatia Global Trading and Asian Natural Resources. The orders empower the bank to start the insolvency resolution process. 

An IDBI Bank executive said the Bankruptcy and Insolvency Code, which came into effect last year, was a useful tool for action to get money back. 

The bank will use the NCLT platform for medium-sized enterprises where it has the maximum exposure. The exposure in  each of the accounts where action is contemplated is over Rs 100 crore.

The IDBI Bank stock has taken a beating after it reported a net loss for the second year in a row. The stock is down 16 per cent from May 18, a day before the bank announced its results

In the year ended March 31, 2017, IDBI Bank posted a net loss of Rs 5,158 crore   against a net loss of Rs 3,665 crore in 2015-16. The bank has created a section to coordinate loan recovery from big accounts. It aims to recover and upgrade over Rs 5,000 crore in the current financial year.

M K Jain, IDBI Bank’s managing director and chief executive, had said last week recovery efforts were scattered across corporate, SME and retail functions. 

Now one vertical will make focused efforts. 

IDBI Bank saw a sharp rise in slippages during 2016-17 to Rs 27,575 crore from Rs 19,087 crore in 2015-16. Recoveries plus upgrades stood at Rs 4,849 crore in 2016-17.

The bank has identified three categories of stressed loans for recovery: Where it is a consortium leader, where it is the sole lender or is in multiple banking relationships covering small and medium size loans, and where it is a member of a consortium.