‘Dirty dozen’ bankruptcy cases to be resolved in current fiscal: SBI

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MUMBAI: State Bank of India (SBI) expects the ‘dirty dozen’ large bad loan cases referred to the bankruptcy courts to be resolved by the end of the current fiscal. According to managing director Arijit Basu, the bankruptcy process has stabilised with several Supreme Court rulings and there is more clarity in the process.

“While the bankruptcy law came into place two years ago, cases had to be referred and a community of resolution professionals needed to be created. Today, there are some thousands of them. Many matters have been referred to the Supreme Court and in one of the judgments, besides speaking of a particular account, they have laid down the process very clearly,” said Basu.

He added that the process has stabilised as there is clarity on how the courts are required to move and on each of the players — the committee of creditors, the operational creditors and the resolution professionals. The timelines are also being met, he said.

The ‘dirty dozen’ refers to 12 of the largest defaulters in corporate India against which banks have been asked to initiate bankruptcy proceedings by the Reserve Bank of India (RBI). These 12 defaulters account for nearly Rs 2.8 lakh crore worth of bad loans and include the likes of Essar Steel, Bhushan Steel and Bhushan Power & Steel.

According to Basu, even internationally, the resolution process does not necessarily happen within 270 days. “Broadly, anything getting resolved within a year compared to other alternative mechanisms is very significant,” he said.

‘Dirty dozen’ bankruptcy cases to be resolved in current fiscal: SBI

Basu was speaking to TOI on the sidelines of the SBI Green Marathon in Mumbai — an event that the bank holds in each of the 16 cities where it has its local headquarters. “We are doing this because we believe that growth has to be sustainable. Many of our institutes and offices draw power from solar panels and we have discontinued single-use plastics,” said Basu.
While SBI stands to be the biggest gainer if the ‘dirty dozen’ cases are resolved, the bank also stands to lose if it has to take haircuts in resolution of power projects where the RBI has put its foot down and refused regulatory dispensation. The RBI’s opposition to easing of bad loan guidelines was reiterated by deputy governor Viral Acharya in a speech last week.
“We are participants in the financial sector, our principal regulator is the RBI, and we will follow whatever guidelines they come out with. We are also in dialogue with them on things that come up, and they listened to us,” said Basu. He, however, added that the RBI was always very clear on the non-performing asset guidelines.
Another positive, according to SBI, was that although credit growth has picked up for the banking sector, liquidity was not a problem. “We do not see any major challenge on the liquidity front. The banking sector is seeing a pickup on the growth front. While liquidity is not a challenge, there are developments in the external market and there are genuine concerns over trade and oil prices,” said Basu. He added that while yields on government bonds have moderated, these were of late linked to stability in financial markets.
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MUMBAI: State Bank of India (SBI) expects the ‘dirty dozen’ large bad loan cases referred to the...

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