Lenders to the near-defunct Zoom Developers plan to club suits filed against the company to speed up legal action and save on costs. Over 25 lenders with loan exposure of over Rs 2,500 crore have filed separate suits in Debt Recovery Tribunals in Mumbai.
A senior public sector bank executive said it would be a time-consuming and costly exercise to pursue the matter separately when the issues and arguments were common.
Punjab National Bank is the lead banker for a lender’s consortium. Each lender will have to approach the tribunal, with request to consolidate cases filed over repayment of dues. Lenders expect to complete work (on clubbing) by the end of this financial year, he said. Entire activity is subject to verdict for the appellate body
The Central Bureau of Investigations has begun examining allegations of banking fraud in loans worth Rs 2,500 crore disbursed to Zoom Developers, a Mumbai-based project developer.
Many of Zoom’s projects, including process plants, industrial and engineering projects and energy, environment and infrastructure projects, were overseas, particularly in Europe and the United Arab Emirates. Banks had issued guarantees for Zoom which have been invoked.
A senior bank official said the group which had some projects in Europe was hit hard after global financial crisis in 2008. Its cash flows came under severe pressure as the system experienced liquidity squeeze.
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It is doubtful asset (loan remaining non-performing assets for more than a year) in books of all lenders. They began to make provisions after classifying this account as non-perming assets in 2010-11.
The bank had taken insurance cover from Export Credit Guarantee Corp of India Ltd (ECGC) for Zoom exposure. Banks are also in negotiations with ECGC for their claims.