Lenders including the State Bank of India (SBI) are looking to sell Essar Steel's loans to Asset Reconstruction Companies (ARC) rather than wait endlessly for the National Company Law Tribunal (NCLT) process, said a source familiar with the matter.
SBI is mulling the idea of inviting bids from ARCs to sell its loans to Essar Steel.
"Bankers appetite has been whetted by the fact that recently HDFC sold Essar Steel's loan of Rs 1,000 crore exposure to Edelweiss at only a 30 percent haircut, the source said.
SBI’s exposure to Essar Steel stands at around Rs 13,100 crore. It was admitted to NCLT in June 2017 and the case has been already dragged on for 15 months. Total banks’ exposure to Essar Steel stands at Rs 45,000 crore.
Recently, Bank of Baroda also sold its exposure in Essar Steel for 70 paise to a dollar.
Banks feel getting 70 percent of loans is now better than waiting indefinitely for NCLT process, the source said, adding that it may have been tempted to sell the loans because of the current attractive rates for Essar loans.
ArcelorMittal and NuMetal are in the race to acquire Essar Steel and the matter is in National Company Law Appellate Tribunal (NCLAT). NuMetal has reportedly offered over Rs 37,000 crore for Essar Steel.
First Published: IST