RBI Intervention Urged on SBI's Equity Buy-In for Supreme Infrastructure
Urgent Call for RBI Action
The Congress party has expressed serious concerns over the State Bank of India (SBI) converting its debt into equity in the defaulter Supreme Infrastructure India Limited (SIIL). Congress general secretary Jairam Ramesh, in a statement shared on social media, condemned SBI's recent actions, emphasizing that this unprecedented decision requires scrutiny from the Reserve Bank of India (RBI).
Key Issues Raised by Congress
Ramesh highlighted that the situation poses a threat to India's corporate debt landscape. The move allows SIIL, which has declared bankruptcy, to keep control while public sector banks incur substantial losses, with SBI taking a massive 93.45% haircut on its debt.
- Potential Precedent Set: This kind of debt restructuring might encourage other companies to seek similar treatments, undermining the integrity of India’s insolvency framework.
- Regulatory Scrutiny Needed: The unique nature of this arrangement raises critical questions on public sector banks' role in handling distressed assets.
- Public Funds at Risk: Critics assert that SBI's alignment with a defaulting borrower over public interest must be carefully examined.
Ramesh concluded that there is an urgent need for public sector banks to adhere to strict debt resolution protocols to prevent moral hazards within the financial system. Immediate regulatory oversight is vital.
This article was prepared using information from open sources in accordance with the principles of Ethical Policy. The editorial team is not responsible for absolute accuracy, as it relies on data from the sources referenced.