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The large steel accounts that have been referred to the National Company Law Tribunal (NCLT) under the Insolvency and Bankruptcy Code (IBC) are the most likely to be resolved first, Sunil Mehta, managing director & CEO of Punjab National Bank (PNB), said on Tuesday.
The bank has an exposure of Rs 11,000 crore to 9 of the 12 large accounts that have been referred to the NCLT. The accounts include Essar Steel, Bhushan Steel, Electrosteel Steels, Monnet Ispat and Bhushan Power and Steel.
“I do not expect that all the 12 accounts will get resolved. I expect out of the nine, at least five-six accounts, especially those in the steel sector will get resolved,” Mehta said on the sidelines of the company’s second-quarter investor meet. “The steel sector is showing positive signs and they are getting bids.”
Mehta also said that investors who place the highest bids for the stressed assets are likely to be given preference by banks, while reiterating that the existing promoters of those stressed assets are legally entitled to bid for their companies.
“As a lender, for me money is money. We will definitely give preference to where we are getting a higher value,” Mehta said. “For example, if I have an exposure of Rs 40,000 crore and the bidders are offering Rs 10,000 crore, but the promoter brings in a new investor saying they will submit a bid of Rs 25,000 crore, we will go with whoever gives the maximum NPV (net present value).”
Mehta said promoters of the stressed asset cannot be denied the right to participate in the resolution process as per the law. “No creditor would like to continue with the same promoter. But participation of the promoter is equally necessary to maintain the asset during the intervening period,” he said. FE