Essar Steel not singled out for insolvency process: RBI to HC

AHMEDABAD: The Reserve Bank of India (RBI) on Wednesday denied before the Gujarat High Court that it was unfairly singling out Essar Steel for bankruptcy proceedings under the National Company Law Tribunal. The central bank instead accused the company of suppressing facts of the case.

RBI counsel Darius Khambatta said Essar Steel’s claim that it was not informed about the NCLT proceedings was wrong since a company representative was present at a joint lenders’ forum meeting.

He said the list of 12 defaulters who should be tried under the bankruptcy law was prepared by an internal advisory committee adopting scientific criteria, where those companies with a loan of at least Rs 5,000 crore that have defaulted and where more than 60% of the loans have been classified as bad loans by banks.


Essar Steel, which has defaulted on more than Rs 40,000 crore of loans, is contesting the RBI order that it be tried under the bankruptcy courts.

The company said its loans recast was almost finalised, but the delay by banks and RBI’s arbitrary selection of March 2016 as a cut-off date clubbed it with some other companies that are dysfunctional. The court would continue to hear RBI’s arguments on Thursday.