In one of the largest loan recast plans, the Joint Lenders Forum (JLF) constituted by various

banks that has approved a plan for the long-term that restructure the loan of Rs 35,200 crore of
Bhushan Steel Ltd (BSL).
The loan recast has been approved under the scheme 5/25 of the RBI. The latest RBI guideline
allow banks to stretch the repayment schedule of infra companies to 25 years with the option of
refinancing the loan at the end of every five years. “On December 15, 2014, the RBI announced
a scheme for long-term structuring of loans in line with cash flows. The JLF has agreed to extend
the loans of Bhushan Steel Ltd for a period of 25 years under the mentioned scheme,” Bhushan
said in a statement to the stock exchanges.
SBI has the maximum exposure of around Rs 6,000 crore. Banks had no other option but to
restructure the debt as a default by the company would add to the already stressed assets of the
banking system.
Bhushan Steel vice chairman and managing director at time was Neeraj Singal who was arrested
by the CBI in August last year in alleged cash for loan scam involving the then Syndicate bank
chairman and managing director SK Jain, who was later suspended by the government.
Banks then formed a committee with officials from various banks to monitor the functioning of
the company. Banks also appointed some new directors to the company’s board. The Bhushan
Steel account was classified as a special mention account in late August last year, triggering the
formation of Joint lenders Forum. Bhushan Steel Ltd posted a revenue of Rs. 10,645.77 crore
and a net loss of Rs. 1,253.83 crore in 2014-15.
Bhushan Steel is the first ever account in the banking industry to be put under the corrective
action plan (CAP) after the RBI devised such a mechanism in its recently prepared framework
for distressed Assets in the economy. Companies have now stated approaching banks for bailouts
under the scheme 5/25 as the RBI has already closed the CDR window from April 1 this year.
Rating agency crisil has cautioned that around Rs. 80,000 crore of stressed loans of which could
be structured under the 5/25 scheme could mask the asset quality pressures and NPAs to be
reported by banks may not give a clear picture about their stress levels.
Bhusan steel is one of the largest manufacturers of auto-grade steel in the country and also has
the largest cold rolled steel plant. It has been o the radar of its lender since the CBI arrests. SBI
had pressed for an external agency to take over the day-to-day management of the company.
Bankers estimate that out of Rs. 35,200 crore that Bhushan steel owes to banks, not less than
20,000 crore worth of debt is likely to be re-financed under the 5/25 scheme. Banks had no other
option but to restructure the debt as a default by the company would add to the already stressed
assets of the banking system.
The below grapht show the exact data of debt of bhushan steel ltd during the period.