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SBI To Recover Around Rs 12,000 Crore From Essar Steel Resolution

The bank is also expected to close the resolution process for Indore-based Ruchi Soya and pocket Rs 800 crore in recoveries.

The Essar logo pictured at the conglomerate’s steel plant in Pune. (Photographer: Dhiraj Singh/Bloomberg)
The Essar logo pictured at the conglomerate’s steel plant in Pune. (Photographer: Dhiraj Singh/Bloomberg)

State Bank of India is set to recover Rs 12,000 crore from Essar Steel India Ltd.’s resolution after the winning bidder, ArcelorMittal S.A, transferred the settlement to an escrow account.

“The money has come into an escrow account with State Bank of India and the distribution to lenders will start today,” Rajnish Kumar, chairman of SBI, told BloombergQuint. “We will be using part of this money to prop up the provisions for one account in the non-banking financial services sector.”

This comes after the Supreme Court of India cleared the decks for acquisition of Essar Steel by billionaire Lakshmi Mittal-led company in November. This will be the single-biggest recovery under the Insolvency and Bankruptcy Code.

On Ruchi Soya

Kumar said the bank is expected to close the resolution process for Indore-based Ruchi Soya Industries Ltd. on Monday. “It will give us Rs 800 crore in recovery that will come to our profit and loss account,” he said. Baba Ramdev-led Patanjali Ayurved Ltd. had secured Rs 3,200-crore loan from a consortium of lenders to fund the acquisition of Ruchi Soya.

The state-run lender forecasts 2020 to “definitely” be the best year in terms of bad loan recovery. “Leaving aside one or two large slippages, our slippage rate has moderated and we have absolutely no issues in terms of provisions,” Kumar said.

SBI’s gross bad loans ratio contracted to 7.19 percent in the second quarter from 7.53 percent sequentially, while the net non-performing assets ratio narrowed to 2.79 percent against 3.07 percent as of June.

The Essar Steel judgment is a landmark judgement which has settled every issue around the resolution under the Insolvency and Bankruptcy Code process. On top of it,  we have the latest amendments which is expected within a few days. There is nothing much to dispute in the process with these two developments. 
Rajnish Kumar, Chairman, State Bank of India

Watch| SBI Chairman Speaks On Postive Impact Of Essar Steel Judgment

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