Besides, sentiment across the entire financial space was dampened after Uttam Galva Steels Ltd (UGSL) deaulted on loan worth Rs 664 crore in the wake of the coronavirus pandemic. UGSL, which shut its plants and operations after the lockdown was announced last month, said it has an outstanding of Rs 1,008 crore to its creditors.
State Bank of India, Oriental Bank of Commerce, Indian Overseas Bank and Vijaya Bank have exposure to the company. Besides, the PSBs, ArcelorMittal is one of the top creditors of the company. A large part of Uttam Galva’s loans was taken over by ArcelorMittal from public sector banks after it made the bid for Essar Steel in 2018 and later won it after a long-drawn legal battle.
The loans were taken over by ArcelorMittal India Private Limited (AMIPL), which had paid off Rs 4,922 crore to the secured financial lenders of UGSL to clear the overdue principal amount as on September 30, 2018, and interest due as on October 17, 2018. Later, the overdue principal paid was assigned to AMIPL and the remaining outstanding loan (till completion of its tenure) continued with existing public sector banks as ‘surviving debt’. READ REPORT HERE
At 10:25 am, SBI recovered 7.6 per cent from lows and was trading 4 per cent higher at Rs 193.8 apiece on the NSE, as against a 3.64 per cent rise in the benchmark Nifty50 index.
The Nifty Bank index
hit an intra-day low of 18,482.90, down 3 per cent on the NSE, but recovered later to trade 5.45 per cent higher. Nifty PSU Bank index, too, bounced back 7 per cent from intra-day low of 1,238.30 level.
Among individual stocks, Bank of Baroda, Canara Bank, Indian Bank, Punjab National Bank, Axis Bank, ICICI Bank, and HDFC Bank declined in the range of 1.7 per cent and 4 per cent on the NSE. On Tuesday, Nifty Bank had surged 5 per cent with counters such as IndusInd Bank, Axis Bank, HDFC Bank, ICICI Bank, State Bank of India and Federal Bank advancing between 2 and 16 per cent.