29 stressed accounts headed for NCLT

Lenders, including the SBI and PNB, are likely to refer majority of the 29 stressed cases identified by the Reserve Bank of India (RBI) in its second list for insolvency proceedings, towards the National Company Law Tribunal (NCLT).

The bankers see a certain comfort level with the tribunal in resolving these cases. Highly placed banking sources said, however, talks are at an advanced stage with Videocon Industries for a resolution outside the tribunal, but nothing has been finalised as yet.
Some names from this second list of 29 are believed to include Visa Steel, Ruchi Soya, SEL Manufacturing and Monnet Power. 

Orchid Chemicals, Shakti Bhog and Jai Balaji Industries are said to be the other names.

SBI is the leader of the lenders’ consortium. Videocon has a total debt of about Rs 50,000 crore. “Talks are at a very advanced stage with them (Videocon)… but we can’t say that anything is finalised. Whether it will be decided before December 13 or not, it can’t be said at this moment,” said a lender whose bank had exposure in the Vengugopal Dhoot company.

The other reason for lenders to turn to NCLT is that if the debts are resolved outside the ambit of the insolvency and bankruptcy code (IBC) and NCLT, then two certified and third party credit rating agencies would have to rate them as investment grade.

Although no official ballpark exposure of all banks in these 29 stressed accounts are available, figures given on condition of anonymity by bankers say this could be around Rs 95,000 crore –Rs 1 lakh crore.

"Our estimate is that the total NPAs in the second RBI list is Rs 1.1 lakh crore and most of them may land up at NCLT" , Karthik Srinivasan, group head of financial sector ratings at Icra, said.

The RBI has given banks time till December 13 to attempt any restructuring or rescheduling of loans for the companies that figure on the second list.

If banks and companies fail to reschedule loan repayment deals, the case will have to be referred to the NCLT under the IBC.

A senior official of a bank, which has maximum exposure in most of the accounts of this second list, said it’s a forgone conclusion that entire list might go to the NCLT.

Of the 29 cases on the RBI’s second list, the largest lender SBI has an exposure to about 27 companies with loans totaling about Rs 27, 000 crore.

SBI did not comment to a mailed questionnaire.

According to sources, Allahabad Bank had an exposure in 13 accounts, amounting to Rs 4,000 crore in this second list.

A Punjab National Bank spokesperson said that the PNB exposure is to the tune of Rs 6,500 crore in 20 cases out of the 29 accounts.