Jaypee lenders may see writeback of Rs 3000 crore
A consortium of lenders led by ICICI Bank would be able to write back Rs 3,000 crore of provisioning they had made against bad loans after UltraTech Cement completed the takeover of Jaiprakash Associates‘ cement business just a day before the end of the quarterly accounting period.
Banks including ICICI, State Bank of India, IDBI Bank, Yes Bank and IndusInd had to set aside money against the outstanding loan to the financially stressed Jaypee Group business as the deal got delayed. They would now be able to write back the amount, boosting their June-quarter earnings, analysts said.
“T he provision of around 25%will be written back. This was a transaction which was expected to go through and so it is not a surprise that it has been done. The banks will benefit from the write back in the first quarter,“ said Suresh Ganapathy , financial sector analyst at Macquarie Securities. In a statement, ICICI Bank said the transaction would help it transfer debt which was previously non-performing to an AAA-rated company .
The total transaction is valued at `16,189 crore out of which `12,000 crore is the loans given by banks. The rest will be paid to various other creditors.
“This is the largest asset resolution in the country so far and I hope that this landmark transaction will pave the way for more such resolutions,“ said Chanda Kochhar, chief executive of ICICI Bank.