13 March 2019: State Bank of India (SBI) on Monday put on sale six non-performing accounts (NPAs) worth Rs 2,338 crore on sale, including its exposures to Indian Steel Corp (Rs 929 crore) and Jai Balaji Industries (Rs 859 crore).
All six assets are being offered on a 100% cash basis, with haircuts ranging between 29% and 76%. The other accounts up for sale are Kohinoor Planet Construction and Gati Infrastructure (Rs 251 crore), Mittal Corp (`116 crore), MCL Global Steel (`100 crore) and Shree Vaishnavi Ispat (Rs 82.52 crore).
The auction for Jai Balaji, Indian Steel Corporation, MCL Global Steel, Kohinoor Planet and Gati are being held as per the Swiss challenge method, based on existing offers from bidders who will have the right to match the highest bid.
Jai Balaji was one of the 29 companies listed by the RBI in its second list of large accounts sent to banks in August 2017. In 2018, SBI had filed an insolvency plea against the company in the Kolkata bench of the National Company Law Tribunal. This is the third time SBI is trying to sell its exposure to Jai Balaji since October 2017. UCO Bank and Allahabad Bank were reported to have sold their entire exposure worth Rs 1,440 crore to Edelweiss Asset Reconstruction Company (ARC) in December 2017 at a 63% haircut, with an upfront cash component of 15%.
The reserve price for the Jai Balaji account has been set at Rs 361 crore, implying that SBI is prepared to take a haircut of up to 58%.
In a report earlier this year, CLSA had estimated that the resolution of Jai Balaji through the insolvency route would entail a 69% haircut for its lenders.
Bad-loan accounts put up for sale by banks so far in the March quarter have risen to over Rs 27,700 crore as lenders rush to make cash recoveries ahead of the close of the financial year 2018-19.