Why the drag in Essar Steel insolvency case makes lenders jittery

SBI Chairman Rajnish Kumar explained the rationale for putting the Essar exposure on the block

With State Bank of India (SBI) putting its entire loan exposure in Essar Steel — the company involved in one of the largest insolvency cases — on the block, one message that’s come through loud and clear is of a loss of confidence in the Insolvency and Bankruptcy Code (IBC). The move was just the cue required for other public sector banks (PSBs) to join in. Union Bank of India, IDBI Bank, Central Bank of India, Dena Bank, Bank of India and Punjab National Bank have all put some of their bad loans on the block as there is an