In a move which marks the beginning of the clean-up of bad loans, lenders led by the State Bank of India will meet today to discuss the fate of three large defaulters- Essar Steel, Bhushan Steel and Electrosteel Steels.
According to a report in The Economic Times, the three steel firms have to repay loans worth over Rs 1 lakh crore to the lenders.
The loans to these three firms are nearly half the loans of top 12 defaulters identified by the RBI which account for 25 percent or Rs 2.5 lakh crore of the total bad loans in the system.
The meeting will revolve around the losses that banks would face in reorganising these loans, and the amount of equity that promoters will have to bring in, two bankers told ET.
A senior SBI official said lenders would seek mandate from the consortium to file for corporate insolvency.
SBI has called a meeting of the joint lenders forum (JLF). It is the lead bank for all the three steel companies which have outstanding loans of Rs 45,000 crore to Essar Steel, Rs 47,000 crore to Bhushan Steel, and Rs 11,000 crore to Electrosteel Steels.
On June 13, the RBI identified 12 accounts for insolvency proceedings with each of them having over Rs 5,000 crore of outstanding loans, accounting for 25 per cent of total NPAs of banks.
The banking sector is saddled with non-performing assets (NPAs) of over Rs 8 lakh crore, of which Rs 6 lakh crore is with public sector banks (PSBs).
These 12 accounts would qualify for immediate reference under the Insolvency and Bankruptcy Code (IBC), the RBI said.
The central bank, however, did not name the defaulters.