Modi’s IBC punch: With Bhushan Steel’s Rs 36,400 crore resolution under the IBC, paving the way for many more cases, former SBI Chairman Arundhati Bhattacharya said that it is a beginning of new era for the banking sector. In an interview to CNBC TV18, Arundhati Bhattacharya noted, “Most of the cases where the cases have gone to court, the court has been very prompt, and they have given very well reasoned judgements…We will hope for many more resolutions in the coming months.”
Notably, Bhushan Steel was the largest account among RBI’s 12 big accounts identified for an immediate resolution. These 12 accounts, constituting 25% of country’s total bad loans, were subsequently admitted by insolvency court National Company Law Tribunal (NCLT).
Bamnipal Steel, (BNPL), a wholly-owned subsidiary of Tata Steel, picked up 72.65 per cent stake in Bhushan Steel Ltd (BSL) for around Rs 36,400 crore, according to a recent statement by Tata Steel. Further, the firm has received all government clearances in acquiring Bhushan Steel. “Lenders recovered almost entire principal loan of Bhushan Steel through Rs 36,400 crore transparent bid by Tata Steel and also got 12 per cent stake in the company,” interim Finance Minister Piyush Goyal noted. Under the IBC, the fear of losing control of their own companies and being barred from overtaking other bankrupt companies have made steel manufacturing giant ArcelorMittal and 2,100 other companies pay up their dues.
While the things are moving at a fast pace, Arundhati Bhattacharya noted that there’s a need to catalyse the entire process, which may be a challenge. “There is no doubt that you need to create the kind of bandwidth, that will enable these cases to be heard, heard quickly and be resolved,” she told the channel.
Taking stock of the current state of the economy, Arundhati Bhattacharya said that many sectors are doing well in the country. “When investments are low, credit growth is very low, still if you see, a lot of sectors are doing very well. If you see the sheer number of tourist arrivals and the usage of airports in the aviation sector. The Mumbai airport is handling more than 980 flights on a daily basis. I you look at all these number,s you begin to realize there is a momentum in the country,” she said.