ICICI sells part of Essar Steel loans to Edelweiss

Edelweiss Asset Reconstruction Company has loans worth Rs 1,600 cr to Essar Steel extended by ICICI Bank

Edelweiss Asset Reconstruction Company (ARC) has loans worth of Rs 1,600 crore to Essar Steel extended by private sector lender ICICI Bank.

Banking sources said the deal (to sell loan) to the ARC was closed recently as part of steps to reduce stress on the balance sheet. An Edelweiss group official confirmed the deal but declined to elaborate further. Essar Steel is already a non-performing account in books of most banks, including State Bank of India.

The slew of steps by the government including minimum import price (MIP) to curb dumping of steel in India has helped steel units to improve financial profiles.

This is expected to put them in a better position to repay loans.

ICICI Bank’s gross non-performing assets (NPAs) rose to 5.82 per cent in March 2016 from 4.72 per cent in December 2015.

ICICI Bank, in its performance review for FY16, had said the increase in NPAs was primarily due to the continuing challenges in the operating and recovery environment. Plus, the central bank’s objective of early and conservative recognition of stress and provisioning has an impact.

RBI had asked banks to review certain loan accounts and their classification over the two quarters ending December 31, 2015 and March 31, 2016