- Bhushan Steel shares sink 10%; hit lower circuit limit
A day after the arrest of Bhushan Steel vice chairman Neeraj Singal in the cash-for-loan case at Syndicate Bank, State Bank of India - a big lender to the firm - today said it will press for an external agency to take over the day-to-day management of the company.
"The suggestion that I have made, which has been accepted by the banks that I have talked to, is that we will try to bring in an external management agency who will oversee the day to day running of the company," State Bank of India Chairman Arundhati Bhattacharya said.
The bank has called for a meeting of the lenders' consortium next week to discuss the proposal, she added.
The system has a whopping Rs 40,000-crore exposure to the Delhi-based Bhushan Steel through 51 lenders. There are two consortia, one on working capital loans led by SBI and the second on term-loans led by Punjab National Bank, representing the lenders' interests.
Bhattacharya said the bank has an exposure of Rs 6,000 crore to the steel-maker which is a standard asset at present.
The company is embroiled in a controversy following the arrest of Syndicate Bank chairman and managing director S K Jain last week for allegedly receiving a bribe of Rs 50 lakh to enhance the credit limits of the company.
The CBI, which arrested Jain, also arrested Bhushan Steel's vice-chairman and managing director Neeraj Singal yesterday.
Bhattacharya said the Bhushan Steel plant in Odisha is running well and the lenders do not want to expose their assets to any difficulties as a result of the imbroglio.
"I don't think the borrower will have any objections and we will like to put in a management agency to ensure that day- to-day operations are not impacted," she said, adding that there is no need for a forensic audit on the firm at present.
When asked if it is possible for lenders to enforce such directions, especially when the account is a performing asset, a senior SBI official said it is very much possible but added that the borrower is free to go to the court.
Bhattacharya said meanwhile that in the past, after an accident at the company's plant, the lenders had decided to make the company appoint a safety expert, which was readily accepted.
Commenting on the arrest of Jain,