The Telegraph
Sunday , April 6 , 2014
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SBI keeps HPL options open

Arundhuti Bhattacharya in Calcutta on Saturday. Picture by Bishwarup Dutta

Calcutta, April 5: The State Bank of India has indicated that it is ready to back The Chatterjee Group (TCG), which is at the helm of Haldia Petrochemicals Ltd (HPL), if the former comes up with acceptable proposals to revive Bengal’s showcase industrial venture.

Speaking on the sidelines of the convocation of IIM Joka in Calcutta today, SBI chairman Arundhuti Bhattacharya said the lender did not shut the door on IOC either, which had emerged as the highest bidder for the Bengal government’s stake in HPL.

“The ultimate objective is to come up with a solution that benefits the company (HPL). Whichever (TCG or Indian Oil Corporation) comes up, we are open to the one that favours the company,” Bhattacharya said. SBI is the lead lender of HPL.

Bhattacharya’s response suggested that the SBI was open to the idea of backing TCG as the latter had emerged as a preferred player to take charge of HPL.

The Mamata Banerjee government is ready to give TCG a chance once more to take up management control of HPL. The contours of the settlement will be disclosed after the election is over.

During a meeting with lenders last month, state officials backed TCG to take control of the company. Since then the two warring partners of HPL — the Bengal government and TCG — are acting in unison. State nominees agreed to a financial engineering plan proposed by TCG to save the company from going to the Board for Industrial and Financial Reconstruction.

The lenders have also provided loan to prevent the company from becoming a non-performing asset in some of their books.

Bankers have twice the exposure in HPL than all the promoters put together. Their approval is critical before any of the proposals to revive the firm is accepted.

IDFC licence impact

The RBI’s in-principle approval to grant a banking licence to IDFC may have a negative impact on infrastructure lending as it will now focus more on building its book and diversifying its asset portfolio, according to Bhattacharya.

“We welcome the RBI’s decision on banking licence. Only thing is that IDFC was a major player in the infrastructure segment. Now they will need to build their own portfolio. Going forward, I don’t see them playing a big role in infrastructure, which is not good for the sector. We need all the people we can get to fund the infrastructure sector,” she said.

IDFC had reportedly said it would reduce its exposure to the infrastructure sector over the next 18 months as it readied itself for banking.

However, Bhattacharya said the SBI would not increase its exposure in infrastructure to fill any vacuum that may be created by IDFC’s decision.

Bhattacharya said although the cost of funds for banks was likely to go up, the State Bank would hold on to the home loan rates. “Home loan rates will remain as it is.”

The RBI on Tuesday had kept policy rates unchanged but lowered the borrowing limit for banks from the overnight facility. A lowering of borrowing limit is likely to increase cost of funds for banks.