The Industrial Development Bank of India (IDBI) has said that it has sanctioned Rs 4,695 crore loan to companies which had defaulted in their repayment of loans in the past two years.
The report by the financial institution to the Joint Parliamentary Committee on stock scam says the sum was part of its sanctions of Rs 6,811 crore to these companies from the period 1996-97 to 2000-01.
According to IDBI the defaulting companies include Daewoo Motors, Essar Oil, Gujarat Alkalies, Haldia Petrochemicals, Ispat industries, Jindal Vijaynagar Steels, Malvika Steel, Nagarjuna Fertilisers, Usha Ispat, Essar Power, Essar Steel, Gujarat Industries and Power, Ispat Industries, Spic Petrochemical and Ispat Metallics.
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The actual level of disbursements by IDBI to these companies during the past two years, that is 1999-2000 and 2000-01, was Rs 2,177 crore. The information was provided by the financial institution in response to a question by the committee on the level of exposure of the company to defaulting companies.
Among the defaulting companies' list the largest sanction by the IDBI during the past two years is to Essar Oil for Rs 530 crore though there has been no corresponding disbursement by it so far to the company.
The financial institution had already disbursed Rs 628 crore to Essar Oil in the period 1996-97 to 1998-99.
The next largest sanction in the last two years was to Malvika Steel for Rs 373 crore, followed by Ispat Industries for Rs 358 crore.
In its response to the JPC on whether it too has had any occasion to disregard the advice of its equity research cell the company has said that it has no such system. But it has added that this has not hampered its ability to evaluate its clients.
It has said that for the appraisal of companies, inputs are provided by the companies' market research department, economic research department, and investment department, respectively.
In addition the company has said that it has set up a separate department christened Secondary Market Operations Department in this fiscal for conducting its secondary market operations.
This committee meets twice in a month to decide on the scrips to be added or deleted from the portfolio of the bank. It has added that any investment in scrips is made after due deliberations on fundamentals of the company such as promoters track record, price earnings and earnings per share ratio and other issues.