With the Central Bureau of Investigation (CBI) arresting Neeraj Singhal, Vice-Chairman of Bhushan Steel, in connection with the alleged Syndicate Bank bribery case, banks are considering engaging the services of a management agency to look after the day-to-day operations of the company to ensure that their ₹40,000-crore loan exposure is not jeopardised.
Fifty-one banks have given loans to the company as part of two lenders’ consortiums – the term loan consortium is led by Punjab National Bank while the working capital consortium is led by State Bank of India.
Lenders’ meetArundhati Bhattacharya, SBI Chairman, said: “We will be calling a consortium meeting shortly. The suggestions that we (SBI) have made, and which have been accepted by the banks that we have talked to, is that we will try to bring in a management agency, which will oversee the day-to-day running of the unit.”
At a press meet to announce SBI’s financial results, she said the Bhushan Steel loan was a standard asset. The exposure of India’s largest bank is around ₹6,000 crore, including external commercial borrowing.
“This (Bhushan Steel) is a very good quality asset. It is currently running properly. We don’t want, therefore, for it to get into any kind of trouble and create trouble for our exposure.”
Bhushan Steel is India’s third-largest secondary steel producer, with a production capacity of about two million tonnes per annum.
“If this (proposal to engage a management agency) receives the consortium lenders’ approval, then we will definitely be taking this up with the company’s board to see that we put in place such an agency,” said Bhattacharya.
She referred to an earlier instance where the company complied with lenders’ stipulations. When there was an accident in one of the company’s plants, the consortium lenders had wanted it to appoint a safety adviser and take the safety steps recommended by the adviser.
“So, even in this case, I don’t really think that the borrower will have any objections and we would like to put in place a management agency to ensure that the day-to-day transactions or operations are not interrupted,” said the SBI chief.
On Thursday, the CBI arrested Neeraj Singhal, Vice-Chairman and MD of Bhushan Steel, in connection with the Syndicate Bank bribery case. Earlier Sudhir Kumar Jain, Chairman and Managing Director of the bank, was suspended.
On August 2, the agency registered two cases against the Syndicate Bank CMD and 11 other private persons, including the CMD and directors of two private firms based in Delhi, in a bribery case, under sections of the Prevention of Corruption Act, and for criminal conspiracy.