Over the last week, Bank of Baroda (BoB) has put on sale non-performing assets (NPAs) worth Rs 7,655 crore, including its exposures to some accounts named in the Reserve Bank of India’s (RBI) two lists of bankruptcy cases, such as Essar Steel, Bhushan Power & Steel, Soma Enterprise and Visa Steel. BoB’s aggregate exposure to these accounts is Rs 3,004 crore.
BoB has also put on the block its Rs 329-crore exposure to Binani Cement, which it had itself dragged to insolvency court. Among the other exposures put up for sale by BoB are Jindal India Thermal Power (Rs 336.41 crore), Jaiprakash Power Ventures (Rs 230.82 crore) and GMR Chhattisgarh Energy (Rs 218.37 crore). BoB’s decision to sell its exposures in these accounts runs counter to an understanding between banks to not to sell individual exposures to accounts undergoing insolvency.
The Indian Banks’ Association (IBA) is known to have issued specific guidelines to this effect to member banks. Earlier, SBI chairman Rajnish Kumar has said that the bank does not approve of lenders selling to ARCs their exposures to accounts that are already undergoing the corporate insolvency resolution process (CIRP).
“There is no question of our selling to ARC once the account has gone to National Company Law Tribunal (NCLT),” he said, adding, “but each individual bank have their own compulsions, policies or strategy. So I would not like to comment on that.”
More recently, however, some banks have found this approach to be untenable. For instance, after IDBI Bank’s March quarter results, MK Jain, then managing director and chief executive at the bank, said it did plan to sell some exposures to second-list companies. FE