In an attempt to clear bank books off bad loans, Bank of India will put up 45 loans worth ₹8,800 cr for sale to asset reconstruction company (ARC). The bidding will happen on September 26 on a 100% cash basis. Presumably this will have an impact on the quarterly results too.
‘Resolution for some of the accounts does not appear to be in sight with many of them under litigation. At least by selling the accounts, we would be able to see the color of money,’ a senior bank official stated.
Alok Industries and Amtek Auto will be put on sale as buyers have delayed payments a per the resolution plan initiated by bankruptcy court. Essar Steel and Bhushan Power & Steel have received aggressive bid. In this case, the bank will decide based on the upside profits shared by bidders. Essar Steel and Amtek Auto can no longer perform overseas transactions. Their accounts have been blocked in bank’s overseas books.
How much they owe?
The largest blocked account Bhushan Steel & Power is on sale. The loan amount stands at ₹2,439 cr. Out of this ₹1,465 cr is from domestic exposure, ₹651 cr from the Hong Kong branch, ₹50 cr from New York branch and ₹273 cr from Tokyo branch. The company is also facing litigation with bidders- Tata Steel, JSW Steel and Liberty House at the appellate bankruptcy court.
Next is Essar Steel with loan amount at ₹1557 cr- ₹1282 crore from domestic branches and the rest from overseas branches. GMR Chhattisgarh Energy owes ₹562 cr.
Other accounts which are blocked include Binani Cement (₹61 cr); Amtek Auto (₹140 cr) and group companies AWM Motor (₹253 cr) and AMW Auto Companies; Asian Colour Coated (₹190 cr); Jai Balaji (₹123 cr); and Uttam Galva Steel (₹198 cr).
The first round will invite bids from various ARC and based on this swiss bank challenge can be invoked in the second round.