Acquisition of Bhushan Steel by Tatas historic breakthrough: Piyush Goyal
Finance Minister Piyush Goyal on Friday said the purchase of debt-ridden Bhushan Steel by a Tata Group company under the IBC proceedings as a "historic breakthrough" in resolving legacy issues of banks.
Bamnipal Steel Ltd (BNPL), a wholly-owned subsidiary of Tata Steel, has successfully completed the acquisition of controlling stake of 72.65 per cent in Bhushan Steel Ltd (BSL) for around Rs 36,400 crore.
Tata Steel Ltd had won the bid to acquire Bhushan Steel in an insolvency auction. The bankrupt firm was among the 12 stressed assets the RBI had referred to the NCLT proceedings last year.
Goyal in a tweet said that it is a "historic breakthrough in resolving legacy issues 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% stake in the company," he tweeted.
Goyal, who is holding the charge of Finance Ministry temporarily, further said that it is 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," he added.
Goyal further said the NPA resolution process is being done through a fair and transparent IBC.
The government under the leadership of PM Narendra Modi has been systematically cleaning the financial & economic mess left behind by the Congress, he tweeted. "Cleaning up banks & resolving NPAs is part of Congress Mukt Bharat #NPAturnaround," he said in a tweet.
Earlier in the day, Tata Steel said that BNPL has successfully completed the acquisition of controlling stake of 72.65 per cent in BSL in accordance with the approved resolution plan under the Corporate Insolvency Resolution Process (CIRP) of the Insolvency and Bankruptcy Code 2016 (IBC).
"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 & Bankruptcy Code brought by this Government..." Goyal said in a tweet.
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, he said further.
Talking to PTI, Financial Services Secretary Rajiv Kumar said the acquisition of Bhushan Steel reflects success of the insolvency and bankruptcy law which will help in cleansing the banking system as well as boost lenders' profitability.
The outstanding principle amount to a consortium of lenders was Rs 44,000 crore excluding interest.
The Financial Services Secretary further said the resoloution process will help recover funds by 53 domestic and international lenders.
Principal Economic Advisory in the Finance Ministry Sanjeev Sanyal that not only did Tatas buy BSL, the recovery amount is over 90 per cent of the principal amount.
Most of this will now go back to the banks and start their recovery, he said and added more such resolutions are expecrted soon.
"A historic moment! Tata buys Bhushan Steel for Rs 36k crores + 12 pc equity. Cheque handed over. First big case fully resolved under IBC. This is as important as 1991 in our economic history," Sanyal said on Twitter.
