New Delhi: Union finance ministry on Friday said successful acquisition of debt-ridden Bhushan Steel by Tata Steel through insolvency and bankruptcy law will increase lending capacity of banks.
“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. Liquidation value of Bhushan Steel was Rs 14,541 crore but creditors received almost four times the amount. This was possible due to the robust and transparent Insolvency and Bankruptcy Code brought by this government,” tweeted finance minister Piyush Goyal.
He said that for the first time such a large loan resolution has been achieved through upfront payment received by banks through sale of a company. “This is a record step towards resolving the legacy of unprecedented amount of bad bank loans inherited by this government.”
Finance minister said that NPA resolution process is being done through a fair and transparent Insolvency & Bankruptcy Code helping boost both the banking sector and the economy.
This has been recognised by International Credit Rating Agencies as well. “With recovery of NPAs, banks will now be in a position to offer more and affordable credit to major sectors of the economy especially the MSME sector. This will boost employment & the economy even more,” said Mr Goyal.
Bamnipal Steel, a subsidiary of Tata Steel, has successfully completed the acquisition of controlling stake of 72.65 per cent in Bhushan Steel (BSL) for consideration of Rs 36,400 crore. This amount would go directly to lenders improving their bottomlines.