Debt Recovery of Sick Steel Companies – Through Takeover by PNB

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BUSINESS MANTRA, FARIDABAD:

LALIT VIRMANI (Author is an Ex-Banking Executive)

 

Executive Director of Punjab National Bank – a leading nationalized Bank, Mr. K.V. Brahmaji Rao has said that the Bank may take-over some of the sick steel companies and may sell them. This exercise is part of the restructuring process, which has the backing of the Government of India. Loans to the sick companies, under this segment, is $4 billion by PNB which may be taken-over in a span of two years. With the change in their management, selling stakes of the companies and recovering dues by the Bank.

The steel companies are struggling due to weak pricing and heavy imports from China.

Bank is also considering talking to the lending partners for this process to dilute the stake of the shareholders of such companies. As a result of this the creditors of sick steel units may convert their debts into equity.

If this move is successful then SBI may also come forward to recover their dues of $23 billion. In total $49 billion bad loans from sick steel industry is due to all Banks in India.

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