Finance, Other, solar

Banks to recall Rs 10 billion Birla Surya loan

According to reportsbanks are likely to recall loan from Birla Surya Ltd – a part of Yash Birla Group – which has defaulted around Rs 1000 crore loan. The loans — which has been classified as non-performing by the lenders — were taken few years back to funds the company’s new project in the infrastructure sector.

One of the lenders to Birla Surya, United Bank of India (UBI) – a Kolkata-based public sector lender, has recently issued a public notice, that the company, even after repeated reminders, have not liquidated the liabilities of the bank and the bank reserves the right to initiate legal actions to recover its dues. UBI has Rs 70 crore exposure to the company.

Following the recall notice is given to a borrower, banks can start the recovery process, Sarfaesi (Securitisation and

Reconstruction of Financial Assets and Enforcement of Security Interest) Act and DRT (Debt Recovery Tribunal) are two routes that lenders can resort to for recovering bad loans.

In early 2011, Birla Surya had announced that it will invest Rs 5,400 crore, over the next five years, to set up an integrated unit for fabrication of multi-crystalline silicon wafers and manufacturing solar photovoltaic cells.

The company had said that it would invest Rs 1,493 crore in the first phase to set up a manufacturing unit with 60 megawatt capacity for multi crystalline silicon wafers and a fabrication unit of capacity 125 mw. The company had borrowed about Rs 1,000 crore from 11 lenders for the first phase of the project. The loan has tenure of 10 years, with an average interest rate of 14.5%.

The multi crore solar photovoltaic project at Rajewadi village, in Satara district of Maharashtra was facing delays as the financial closure of the is not completed as a as major portion of the equity was not tied up. The project is also yet to receive Pollution Control Board (PCB) certificate.

Following rise in non-performing assets, amid a slowing economy, state-run banks have beefed up their recovery efforts. The move comes after Finance Minister P Chidambaram asked banks to act tough on corporate defaulter in a meeting with public sector bank chiefs earlier this month. “We cannot have an affluent promoter and a sick company,” the finance minister had said last month after a meeting with chief executive of public sector banks.

Public sector banks have been asked to frame a board approved recovery policy and to constitute a board level committee for monitoring of recovery. The top 300 NPA accounts are reviewed by the management committee of the board.



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