In a move towards winding up of Industrial Investment Bank of India (IIBI), its board has decided to sell the entire loan book at one go. The directors on the IIBI board cleared the proposal to auction both the good and the bad assets of IIBI for cash in the past week. The company has also decided to appoint Deloitte & Touche to sell the loan book.
When contacted, chairman of Allahabad Bank, AC Mahajan, who is holding concurrent charge of IIBI, refused to comment. Sources said IIBI loan is about Rs 1,000 crore and this includes both - standard and sub-standard assets. Sources said auction would be in line with CVC guidelines.
The governmentowned IIBI started working towards winding its business way back in 2005 after the Industrial Development Bank of India rejected a government proposal to merge the Kolkata-based institution with itself. Over the past couple of years, IIBI has stopped giving additional loans to corporates. Besides, IIBI has already reduced its staff, by giving them a choice of joining other public sector banks. In fact, early this month, IIBI withdrew its membership from the corporate debt restructuring (CDR) forum - where lenders get together to resolve sticky assets.
High level of bad loans and poor capital was one of the key reasons why the government decided to close it down. As per RBI data, IIBI's capital adequacy ratio (CAR) was negative at 64%, while its bad loans stood at 13% for March 2006. It had a loan book of Rs 1,006 crore with Rs 874 crore of standard assets. The balance Rs 132 crore were sub-standard and doubtful assets as on March 2006. Although details for 2007 were not available, RBI indicated that IIBI is in the process of voluntary winding up.
High level of bad loans in IIBI books emanates from its original avatar as an asset reconstruction company. Prior to being converted as a fullfledged financial institution as IIBI, it was in the business of acquiring and restructuring bad loan as Industrial Reconstruction Bank of India.
Every time an offender stealthily leaves India to take refuge in another country, the Government of India starts all over again with its strategy of bringing him back to the nation to make him stan More
Helplinelaw can set up your session with quality and experienced lawyers to discuss and resolve your legal matters. You can avail consultation in form of sending questions, phone call or webchat discussion More