Jairam Ramesh raises alarm on SBI move to become stakeholder in Supreme Infrastructure, ‘RBI must step in and examine…’
Congress has expressed concern over the State Bank of India's decision to convert its debt in Supreme Infrastructure India into equity, urging the RBI to investigate the move, which they believe sets a dangerous precedent in corporate debt management.
The Indian National Congress (INC / Congress) on September 24, has raised alarm about the State Bank of India (SBI) choosing to convert its outstanding debt in Supreme Infrastructure India (IIL) into equity.
In a post on social media platform X (formerly known as Twitter), Congress general secretary in-charge communications Jairam Ramesh urged the Reserve Bank of India (RBI) to intervene and examine SBI's decision.
He shared picture of a media report which stated that SBI would take up dual role in the debt restructuring of defaulter SIIL and transition from being the troubled company's primary creditor to becoming an equity stakeholder.
What Did Jairam Ramesh Post?
“In a extraordinary move, the SBI has decided to convert its outstanding debt into equity in Supreme Infrastructure India Limited (SIIL), a firm that declared bankruptcy. The lendors, including SBI, took a 93.45% haircut on the debt. This arrangement creates a dangerous precedent in India's corporate debt landscape,” Ramesh wrote.
He listed the ways in which this would be “dangerous”, saying, “It encourages other defaulting companies to seek similar deals, where they can retain control and value even after significant defaults.”
Adding, “It raises questions about the effectiveness of India's insolvency resolution framework and the role of public sector banks in managing distressed assets. The SBI appears to be aligning itself with the interests of the defaulting borrower (SIIL) rather than prioritizing the recovery of public funds.”
He asked the RBI to “step in and examine” SBI's processes, adding, “There is a pressing need to ensure that public sector banks maintain strict discipline in their approach to debt resolution and avoid creating moral hazards in the financial system. The unusual nature of this debt restructuring and equity investment calls for immediate regulatory scrutiny. The Reserve Bank of India (RBI) needs to step in and examine SBI's decision-making process in this matter.”
Catch all the Business News , Corporate news , Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
Business NewsCompaniesNewsJairam Ramesh raises alarm on SBI move to become stakeholder in Supreme Infrastructure, ‘RBI must step in and examine…’
First Published:24 Sep 2024, 12:54 PM IST
- Top Gainers
- Top Losers
- 52 Week High