SBI wants external agency to run Bhushan Steel

A day after the arrest of Bhushan Steel vice chairman in the cash-for-loan case at Syndicate Bank , SBI - a big lender to the firm -  said on Friday it would press for an external agency to take over the day-to-day management of the company.

"The suggestion that I have made, which has been accepted by the banks that I have talked to, is that we will try to bring in an external management agency who will oversee the day to day running of the company," State Bank of India Chairman Arundhati Bhattacharya said.

The bank has called for a meeting of the lenders' consortium next week to discuss the proposal, she added.

The system has a whopping Rs 40,000-crore exposure to the Delhi-based Bhushan Steel through 51 lenders. There are two consortia, one on working capital loans led by SBI and the second on term-loans led by Punjab National Bank, representing the lenders' interests.

Bhattacharya said the bank has an exposure of Rs 6,000 crore to the steel-maker which is a standard asset at present.

The company is embroiled in a controversy following the arrest of Syndicate Bank chairman and managing director S K Jain last week for allegedly receiving a bribe of Rs 50 lakh to enhance the credit limits of the company.

The CBI, which arrested Jain, also arrested Bhushan Steel's vice-chairman and managing director Neeraj Singal on Thursday.

Bhattacharya said the Bhushan Steel plant in Odisha is running well and the lenders do not want to expose their assets to any difficulties as a result of the imbroglio.

In the Budget, the government had sounded positive about consolidation in the banking space and Financial Services Secretary GS Sandhu had said the process will kick-start with a merger within the SBI Group this fiscal.

Net profit of the five associate banks of SBI declined to Rs 702 crore from Rs 837 crore, a fall of 16.09 per cent on an annual basis.

The associates are State Bank of Bikaner and Jaipur, State Bank of Travancore, State Bank of Patiala, State Bank of Mysore and State Bank of Hyderabad.

Among these, State Bank of Bikaner and Jaipur, State Bank of Mysore and State Bank of Travancore are listed entities.

SBI Life reported a net profit of Rs 241 crore in Q1, while MF arm gave in Rs 39 crore and the i-banking unit SBI Caps chipped in with Rs 55 crore.

Another subsidiary, SBI Cards & Payment Services, posted 70 per cent increase in net profit at Rs 114 crore in the June quarter from Rs 67 crore in the year-ago period.