At least four banks have some relationship with the now-disgraced Satyam Computer Services. However, all of them denied that they had given any loans to the company.
At least four banks have some relationship with the now-disgraced Satyam Computer Services. However, all of them denied that they had given any loans to the company.
Private banks ICICI and HDFC, foreign lender Citibank and public sector Bank of Baroda, all have either current accounts, deposits or manage salary accounts for the company.
Bank of Baroda, for example, manages a current account for Satyam.
V Santhanaraman, executive director, BoB, said the bank has some “deposits which are usual” in the current account. “We have not given them loans. The company is strong because the problem is with an individual. We will allow operation of the account by whoever is mandated by the board,” he told DNA Money.
The Hyderabad based-IT company is fighting bankruptcy after promoter and chairman B Ramalinga Raju confessed to overstating the company’s cash and bank balance by Rs 5,040 crore as on September 30.
He also admitted to wrongly declaring an interest of Rs 376 crore besides hiding a liability of Rs 1,230 crore from the company’s books. Satyam’s salary accounts are managed by private sector ICICI Bank and HDFC Bank. ICICI said that it has no fund-based or non-fund based exposure in Satyam.
“There is a marginal exposure of about Rs 3 crore on account of a currency forward contract. Satyam also has some deposits in the current account which is not material,” a spokesperson from the bank wrote in an e-mailed reply.
Among foreign banks, HSBC refused to comment, while US-based Citibank said it had a “small relationship” with Satyam, details of which were not open to the public.
Meanwhile, an analyst from a foreign brokerage said that there was every possibility that the Rs 253 crore of secured loans that Satyam declared in the quarter ended September may turn into bad debts. However, analysts said the amount is too small for it to have any impact on any big lenders’ books.
“Banks must have given only secured loans and the total impact of these loans would be very negligible, may be 5-6 basis points. Even the Rs 3 crore forward exposure by ICICI would be very small to have any impact,” said Suresh Ganapathy, banking analyst with Deutsche Bank.
A foreign brokerage analyst, who did not wish to be named because his report was for private circulation, said that even assuming 30-35% of the debt is with ICICI, it amounts to Rs 75-85 crore of bad loans, which is just 0.05% of ICICI’s loan book.
A majority of Satyam’s overstated cash balances were supposedly with foreign banks like Citibank, HSBC and BNP Paribas.
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