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United Bank of India likely to oppose SBI on Bhushan Steel

Friday, 15 August 2014 - 6:05am IST | Place: Kolkata | Agency: dna

Kolkata-based lender says any appointment of external agency to run the company would be a hasty measure as the account hasn't yet turned bad

United Bank of India (UBoI) appears to have a serious difference of opinion with State Bank of India (SBI) over the Bhushan Steel case.

While SBI has expressed its desire to appoint a management agency to run Bhushan Steel and is reportedly in discussion with other lenders for their support so that the aggregate exposure of Rs 40,000 crore doesn't turn bad, UBoI believes there is no need for such hasty proactive measure as the account is still healthy with no defaults of delays in payment of interest or principal till now.

UBoI has similar difference of opinion with SBI on the other much-talked-about account Kingfisher Airlines too.

"A promoter-director of Bhushan has been arrested for activities they were doing in their individual capacities but it isn't concerned about the operations of the company or its performance. The account is still standard and nowhere it is an NPA. SBI as a leader of the consortium is considering whether the management can be changed or in what way the consortium can interfere in its operations. A decision by the consortium would be taken on this on August 18 which we would also be attending," bank's executive director Sanjay Arya said.

The Central Bureau of Investigation last week arrested Neeraj Singal, vice chairman and managing director of Bhushan Steel in connection with Rs 50 lakh bribery scandal involving chairman and managing director of Syndicate Bank S K Jain.

"Assets have been created, but the company is suffering losses because of economic slowdown. We discussed this in our board today and formulated our strategy about what to do. I will be representing UBoI on August 18 at the Bhushan Steel's consortium meeting. Though there is a stress we are fine with the account," UBoI's other executive director Deepak Narang said.

Narang didn't disclose the bank's exposure to Bhushan though he said it is not much.

UBoI has similar difference of opinion with SBI on the other much-talked-about account Kingfisher Airlines too.

On Kingfisher Airlines account, Arya said, "The Kingfisher episode has shown how bold a step even a small bank like us can take, and which has been well appreciated by the finance ministry."

"We had initially proposed to SBI to take so many steps. It was UBoI which proposed that the consortium should jointly file a winding-up petition against Kingfisher Airlines but there was so much withering within the consortium. A year back, we realised that there was little chance of getting money back from Kingfisher so we then went ahead and filed our own winding-up petition in Bangalore. It was due to that step we could recover Rs 250 crore from the stake sale in United Spirits to Diageo," he said.

Mallya has gone to court in trying to stop UBoI from declaring him a wilful defaulter.

"The hearing was supposed to take place today but it didn't happen. It will happen next on Monday. We expect a decision soon," Arya said.

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