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.