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ICICI Bank stings Mardia

Mumbai, Nov. 28: The crackdown on errant borrowers launched by banks and financial institutions received a further boost when ICICI Bank Ltd today announced that it has taken over the assets of Mardia Chemicals’ Vatwa unit in Gujarat. Mardia Chemicals owes more than Rs 1,450 crore to banks and financial institutions.

ICICI Bank’s move follows that of the State Bank of India which took over a 66-room hotel in Nashik on November 10 for clearing an outstanding of about Rs 11 crore.

Soon after, the Debt Recovery Tribunal (DRT) put up the properties of Daewoo Motor India’s Surajpur unit for sale. The DRT, in a public announcement, invited offers for the purchase of DMIL’s property in Surajpur not later than December 18.

ICICI Bank was also one of the aggrieved lenders in the Daewoo case, which included creditors like the Industrial Development Bank of India and Exim Bank. Banks and financial institutions had an exposure of more than Rs 970 crore in the company that had an accumulated loss of Rs 300 crore.

Banks have been encouraged to take over assets of errant companies following the passage of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Bill 2002 by Parliament.

The Lok Sabha had already given its assent to the Bill—which empowers banks and financial institutions to seize assets of defaulters to clear their dues or change their management—on November 21.

ICICI Bank officials today told The Telegraph that it has taken over the assets of the Vatwa unit of Mardia Chemicals under the Securitisation Ordinance, through the chief metropolitan magistrate of Vatwa, Ahmedabad.

The company owed Rs 1,450 crore (including a principal of Rs 800 crore and balance unpaid interest) to 22 lenders, including Bank of Baroda, Bank of India, Corporation Bank, Union Bank, IDBI, Life Insurance Corporation, IFCI and New India Assurance. The move was taken after the bank obtained consent under the Ordinance from all these lenders.

The official pointed out that on November 27, the bank’s officials accompanied by the assistant superintendent of the magistrate’s court along with technical experts and a battery of police took over possession of the company’s unit. Thereafter, possession was handed over to the bank’s authorised officer.

Pointing out that the “company had, over the years, made five different references before the BIFR with the sole intention of frustrating the recovery process,” the source added the lenders have now combined their efforts to recover their dues from the company.

The leading private sector bank had issued a notice in July to Mardia and on expiry of the required 60-day period, it decided to take over assets of the closed unit. He added that by taking measures under Section 13(4) of the Ordinance the BIFR proceedings currently stand abated.

It may be recalled that Mardia Chemicals had earlier approached the Supreme Court wherein the latter in its interim order said that lenders could take possession but not sell off the properties under the Ordinance, thereby creating a third party liability. The hearing in this case is scheduled to commence tomorrow.

The apex court had earlier admitted a petition filed by the Ahmedabad-based Mardia Chemicals to transfer the cases filed by it in the Delhi high court against notices sent by banks and financial institutions to the company under the ordinance.

Bankers said with close to 2,000 such notices issued to errant companies, the passage of the Bill in both houses of Parliament is set to now yield more such asset possessions in the days to come. The combined non-performing assets of banks is estimated to be close to Rs 70,000 crore.

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