The Reserve Bank of India (RBI) has sought data from banks, which have direct or indirect loan and equity exposure to Satyam Computer Services and its related companies or subsidiaries.
The data will also include exposure, if any, of international branches of Indian banks to the embattled company and related parties.
Official sources close to the development said that firstly, banks may be asked to write off the short-term loans to the company to maintain the margin amount with broking houses and custodians, to keep the shares afloat in the market, as there has been a sharp fall in the share prices.
Secondly, those who have institutional holdings in direct equity and long term loans may be asked to follow the usual debt recovery route. Banks may also ask the company to release funds from its vast expanse of real estate holdings. A decision to this effect will be taken at a proposed meeting of all related banks.
Since the company has admitted financial irregularities, the dues to various lenders and creditors may become non-performing assets (when dues remain unpaid). As per the RBI guidelines, in such eventualities, the bank needs to first classify the asset as non-performing and make adequate provisioning against such dues. Only then can it initiate recovery proceedings against the company.
State Bank of India (SBI) is understood to have an approximate exposure of around Rs 200 crore to the company. However, neither the figure nor the break-up could be confirmed. As of September 2008, the total reported secured debt of Satyam, as per the company’s balance sheet, was about Rs 253 crore. Sources said that given the overstatement in terms of cash balance, the loans are likely to become non-performing loans. Unsecured debt of the company was around Rs 235 crore at the same time.
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However, as per the data available in the public domain, no bank has an exposure of more than 1 per cent in the company.
Sources said the loan exposure in the form of margin money may have a direct impact as these have to be marked to market immediately. The entire exercise will be a drag on the balance sheet of the banks, which is due for closing in two months. This also comes at a time when the accounts are already falling into sub-standard or the non-performing category following the economic slowdown, said a source.
“Mark to market” is an exercise to value the investments as per the present market value of the scrip. The scrip has fallen in value and is in the process of being removed from the market index.