2 min readMumbaiOct 26, 2012 12:37 AM IST
First published on: Oct 26, 2012 at 12:37 AM IST
Attempts by banks to recover Rs 2,700 crore lent to Zoom Developers have failed with the state-owned Export Credit Guarantee Corporation ECGC rejecting the claim on the project development company,which has defaulted on bank loans and closed down operations.
A consortium of nearly 25 banks led by Punjab National Bank had lent the amount to the Mumbai-based company,which had bagged many projects overseas,particularly in Europe and the UAE. A major portion of the banks exposure was in the form of bank guarantees for projects to be undertaken abroad.
The banks demanded the insurance cover from ECGC but rejected. We rejected the insurance claim as it failed to meet the conditions. We had given cover only to part of the banks exposure, a top official of ECGC said.
ECGC,which functions under the commerce ministry,seeks to improve the competitiveness of Indian exporters by giving them credit insurance at the lowest level premium.
The overseas projects of Zoom never took off. The company then blamed the global financial crisis for its failure in executing projects. What one cant understand is that 25 banks lined up to provide Rs 2,700 crore to this little-known company, said a banking source.
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