The consortium of bankers who have a combined exposure of about ₹40,000 crore (about $7 billion) to the Bhushan Group, will meet in New Delhi on August 18 to review the status of their exposure and decide the future course of action in the wake of the recent arrest of Bhushan Steel’s Vice-Chairman Neeraj Singhal. For all the lenders in the consortium, Bhushan Steel continues to be a standard asset, even as there are worries about the stress in that account in recent months. The main purpose of the lenders’ meeting is to see how banks can protect the asset.
The meeting was long overdue but the recent arrest of a key company official could have been the trigger for convening it, sources in the banking industry said.
The asset stress is seen more as a company-level issue, although the general slowdown in the economy had weighed on the steel industry’s performance. At the meeting, top lenders, such as State Bank of India, may push for appointment of a managing agency to oversee the steel company’s operations, it is learnt. SBI has an exposure of ₹6,000 crore to Bhushan Steel.