Given the deal values for sale of steel assets under the National Company Law Tribunal process, the ARC offer — 70 per cent of the total debt — looked reasonable.
If lenders are able to sale their loans to the ARC this month, it will reduce their NPA volume substantially.
Money from the sale proceeds could be deployed for lending in the coming quarters, a senior public sector bank executive said.
“With slow credit growth, the interest income is also subdued,” said a banker. “We have a huge obligation to make provisions for bad loans. If bond yields harden further, the provision for erosion in value of bond may go up.”
Major lenders to Essar Steel
are State Bank of India, ICICI Bank, Bank of India, IDBI Bank, and Punjab National Bank.
Some lenders have already sold a part of their loans to Essar Steel