Banks showcased Rs 1.31 lakh crore of corporate loans in fiscal 2018-19, forced by delays in resolutions at National Company Law Tribunals (NCLT).
Even in cases like textile company Alok Industries where the bidder has been approved, banks want to offload the loans to avoid delays.
"From the time the case is admitted to the final order from NCLT the average time is 18 months, which many of the large cases are exceeding as litigations are moving to the higher courts like the high courts and also Supreme Court," said a chief executive officer of a leading asset reconstruction company. Even after the final order, it takes another eight months for the money to flow into the books of banks.
With Insolvency and Bankruptcy Code (IBC) 2016 failing to get settlements within stipulated timelines, banks are trying hard to sell off the cases, especially those which are in various stages in the bankruptcy courts.
NCLT approved the sale of Alok Industries to Reliance Industries and JM Financial ARC this month, though the case was admitted in July 2017. Essar Steel, KS Oil, Gammon India, GTL Infrastructure, Visa Steel, Uttam Galva Steel are some of the companies where the cases have been referred to NCLT but the money is yet to flow back to banks. In the case of Essar Steel, it is over 600 days since it was first referred to the NCLT, and the final word on the case is yet to be heard.
The top sellers of the soured corporate debt were the public sector banks. Bank of India put 309 accounts with loans of Rs 37,720 crore, State Bank of India (SBI) put Rs 32,609 crore of loans, Andhra Bank 321 accounts with loans of Rs 12,602 crore, Canara Bank showcased Rs 6,061 crore from 94 accounts, Central Bank Rs 928 crore from 49 accounts and United Bank of India Rs 4,311 crore from 156 accounts. Majority of these accounts are at various stages of resolution in NCLT.
Bhushan Power and Steel is another company having protracted innings at the bankruptcy court with the promoter Sanjay Singal trying hard to retain the company. JSW Steel with an offer of Rs 19500 crore was selected as the highest bidder, pipping Tata Steel and Liberty House. Uncertain over how long they will have to wait for the recovery, at least two banks have decided to shed these loans. United Bank of India is trying to auction Rs 883.72 crore of loans that it extended to Bhushan Power and Steel. Central Bank of India also showcased its loan of Rs 1,550 crore to Bhushan Power in the auctions in March 2018.
United Bank is also trying to auction off the Rs 753 crore of loans it extended to Alok Industries and the Rs 338 crore extended to Gammon India, which was also showcased in the auctions.
In cases where the hope for recovery is almost nil, banks are forced to auction. Bank of India has showcased Rs 1,838.16 crore of its loans to Reliance Communications but failed to get any takers. RCom has Rs 45,000 crore of outstanding to the banks, but it moved the NCLT and filed for bankruptcy, leaving the banks with no option but to sell off the assets.
"Reliance Industries was to take over the telecom assets of the company and repay us part of the loans but that plan did not go through, and now with the company having filed for bankruptcy there is little hope for recovery for the lenders," said a senior banker who is also trying to offload its loans to RCom.
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