BPSL order puts ₹34,000 cr bank fund at risk

Banks will have to pay back ₹19,350 cr they had received from JSW, and will have to provide for that in June quarter

- ENS ECONOMIC BUREAU @New Delhi

THE Supreme Court order rejecting JSW Steel's ₹19,800 crore resolution plan and liquidating Bhushan Power & Steel Ltd (BPSL) has put at risk around ₹34,000 crore of banks' exposure to the latter.

The banks will have to pay back the entire ₹19,350 crore they had received from the JSW group, and will have to fully provide for that in the June quarter. BPSL had owed ₹48,523 crore to the lenders, most public sector banks led by the SBI.

The court order also puts question mark on the fate of the ₹10,800 crore JSW had borrowed to fund the acquisition along with a ₹4,000 crore term loan that BPSL had raised to run the company after the ownership changed hands.

The development comes as banks are already facing squeezed margins — as lending rates are falling and will likely fall more in the coming months but deposit prices remain highly elevated and will remain so for some more quarters.