A consortium of Indian banks led by the largest, State Bank of India (SBI), referred Indian ductile cast iron pipe manufacturer Electrosteel Castings Limited before the National Company Law Tribunal (NCLT) on Thursday, June 29, marking the first move toward bankruptcy proceedings against the company, sources at the banks said on Friday, June 30.
The bankruptcy proceedings against Electrosteel have been initiated by the consortium of banks to recover loans estimated at $1.6 billion on which the company has defaulted, the sources said.
The Reserve Bank of India early last week identified 12 defaulting borrowers accounting for 25 percent of total bad loans of domestic commercial banks, including steel companies like Bhushan Steel Limited, Essar Steel, Bhushan Steel and Power and Monnet Ispat.
RBI has issued directives to all commercial banks that these companies should be immediately referred for bankruptcy resolution under the Insolvency and Bankruptcy Code, and the referring of Electrosteel to the NCLT is the response of the commercial banks in adherence to these directives, the sources added.