India’s central bank Reserve Bank of India (RBI) which on Tuesday, June 13, announced that 12 borrowers were identified for reference to bankruptcy proceedings is likely to include at least few steel companies, Indian government officials said on Wednesday, June 14.
The officials said that though the RBI has not yet formally identified the 12 borrowers to be referred for bankruptcy after detailed talks between the central bank and commercial lending banks, at least two or three large steel companies are expected to figure in the list considering the steel companies’ key financial figures such as gross debt and interest coverage.
The 12 accounts identified account for about 25 percent of the total bad debts of commercial banks, the officials added.
According to the officials, the two or three large steel companies likely to figure in the list would account for at least half of the 25 percent of the bad loans of the total 12 accounts referred for bankruptcy.
The Indian government has recently amended the RBI Act to empower the central bank to direct commercial banks to take punitive act against defaulting borrowers under the newly promulgated Insolvency and Bankruptcy Code.