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State Bank of India hopes to resolve 7-8 stressed power assets with an exposure of around Rs 170 billion during the breather given by the Supreme Court till November 11, SBI Chairman Rajnish Kumar said on Thursday.
The Supreme Court has asked the banks to maintain status quo and not to initiate insolvency proceedings against defaulting power companies till November 11, 2018, when it would hear the case again. During this period lenders would be able to resolve stressed assets.
"On my radar there are 7 or 8 projects. We are working only on that. If there is 100 per cent consensus among lenders only then it (resolution of stressed power assets) would happen," Kumar told reporters when asked whether SBI would be able to resolve any stressed assets during the breather till November 11.
About any resistance from lenders to resolve these stressed assets, he said, "They are all at various stages of approval. So at this stage, it is not the right statement to say that there is resistance. We have to give time to boards and management committees of lenders to take a decision.
"SBI has taken a decision regarding 7 to 8 such projects. We have conveyed that. Some other banks have also conveyed and some other banks are yet to get approval. That is why we need some time."
About the SBI exposure in those assets, he said, "SBI has exposure of Rs 170 billion in these projects."
About the Supreme Court order, he said, "Whatever legal options or whatever is permitted by law and regulation would be done. Right now the Supreme Court has said that maintain status quo (on Feb 12 circular)) in respect of petitions pending in high courts. So everybody is maintaining the status quo."
The RBI framework provided for a strict timeline for resolution of these bad loans where debt is Rs 20 billion or more. It mandates starting insolvency proceedings in case no resolution plan is provided by the lenders within 180 days of default.
About the steps to check rupee depreciation, he said, "There are some more measures which are coming. But current account deficit needs to be contained. The step taken so far would definitely help the sentiment in favour of the rupee."
On steps taken on containing rupee depreciation by bankers like NRI bonds, he said, "Whatever you do ultimately add to the debt burden of the country. It is not what banks will decide. Ultimately these are the issues or decisions which are to be taken by RBI that how do we manage our external sector. Once those decisions are taken, the banks implement those decisions."
About unveiling of SASHAKT scheme guidelines, he said, "That is what in progress. earlier target was September 30, you can add 10 to 15 days more to that. Banks can invest up to 10 per cent in AIF (alternative investment fund). But it has to carry in mind that 10 per cent carries 150 per cent risk weight. But in AMC (asset management company) we would be participating to the extent of 10 per cent."
Project Sashakt aims to strengthen the credit capacity, credit culture and credit portfolio of public sector banks. It is an Asset Management Company (AMC) resolution approach, under which an independent AMC would be set up to focus on asset turn around, job creation and protection.
Kumar spoke to reporters on the sideline of an event where Hindustan Urvarak & Rasayan Ltd (HURL) signed the Rupee Term Loan (Rs 53.14 billion) agreement for the Gorakhpur fertiliser plant with a consortium of banks led by the SBI as the lead banker and Punjab National Bank, Allahabad Bank, Union Bank of India, Indian Bank, Bank of India and Canara Bank.
The HURL is a joint venture company of three Maharatna PSUs -- NTPC, IOCL and CIL -- along with FCIL & HFCL and is currently engaged in implementing three urea projects at Gorakhpur, Sindri and Barauni in the eastern part of the country.
These plants which are being built at an estimated cost of Rs 210 billion shall bring a new lease of life in the economic growth of eastern India. The GAIL is implementing a natural gas pipeline for supplying gas to these three plants and the total investment by HURL and GAIL amounting to Rs 360 billion.
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First Published: Thu, September 20 2018. 19:35 IST