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Essar Steel case: SBI MD Rajnish calls for faster resolution of NPAs

Rajnish Kumar hoped that the Gujarat High Court will decide quickly on the Essar Steel case

IANS  |  New Delhi 

Essar Steel case: SBI MD Rajnish calls for faster resolution of NPAs

Unhappy with the pace of the resolution of (NPAs), especially with the in the court, a top SBI official on Friday said the process should be faster as delays lead to further losses.

"Resolution should be faster than this. The more you delay, more is the loss of economic value, which is in nobody's interest. Let's find out to what level the debt can be sustained or not sustained and if the company needs to go into liquidation, we need to do that," State Bank of India Managing Director told BTVi in an interview.

hoped that the Gujarat High Court will decide quickly on the "Delaying the process is in nobody's interest. We will only pray that the court decides on the matter quickly and settles the law."

Essar Steel, one of the 12 large NPAs identified by the Reserve Bank of India (RBI), had approached the High Court for putting on hold the RBI proceedings, contending that the same were arbitrary.

Making the insolvency proceedings against Essar inoperative until July 12, the court asked the RBI to amend its order that the (NCLT) would give priority to the cases identified, which the apex bank complied to.

The High Court on Thursday directed for placing on record before it an RBI directive to a SBI-led consortium of lenders to initiate insolvency proceedings against Essar Steel.

The company has told the court that it was kept in the dark about the insolvency proceedings when the company was in a restructuring mode, a claim disputed by the banks.

"Since the case is in the court and if the company has sought legal remedy, the court will decide and give judgement quickly. This is a new law; interpretations around the law, and the ecosystem -- everything is in development stage," the SBI officer said.

The government, through an ordinance, had vested the power in RBI to direct banks to initiate insolvency process against the top bad debt accounts.

The RBI's IAC (Internal Advisory Committee) has chosen top 12 NPA accounts for insolvency which has outstanding debt of above Rs 5,000 crore, Essar Steel being one of them.

Essar Steel had a debt of Rs 45,655 crore, of which Rs 31,671 crore had turned NPAs for banks by March 31, 2016. This increased to Rs 32,864 crore by March 31 this year.

Not blaming the law for the delay in resolution, said it was much needed. "Giving the role to the regulator itself (RBI) was an extraordinary step. Somebody has to decide and give the push, and guide the process."

Since the NPA situation had reached an extraordinarily high level, the "extraordinary step" in the form of the ordinance was required from the government, he added.

"In a capitalist society, if you do not have a proper insolvency law, the system cannot work. Not all corporates can survive -- it is the survival of the fittest. And the one who cannot survive, there has to be an exit route. And the law precisely does that. I am sure they (corporates) can seek protection under the law. It provides time to work out the resolution with all the creditors," he said.

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

First Published: Fri, July 14 2017. 19:36 IST